How Paul Gagliardo taps the 'next big thing' at American Water

Matthias Krause

Hear Gagliardo explore Big Data and big water at VERGE SF, Oct. 27 to 30.

Who would predict that an environmentally conscious hippie would become a prominent name at America’s largest publicly traded water utility (or a self-proclaimed alien, for that matter)? Yet those who hear Paul Gagliardo talk about his work as manager of American Water’s Innovation Development Program can’t help but think that his has a lot of fun with it.

“I am a venture capitalist without the capital,” says Gagliardo. Basically, just like a VC, he shifts through pitches from people who have great ideas about how to make American Water’s business cleaner, more efficient and more successful. Those who make the cut get 15 minutes to state their case. Next, Gagliardo decides if the idea has any merit to be eligible for the next steps, potentially resulting in a strategic partnership.

He looks at new technologies, products and services, and vets them for their technical efficacy and value proposition. “If it’s only 5 percent better than what works now, it’s not that big a deal,” says Gagliardo, “if it’s 50 percent better, now we’re talking. And so that’s how we look at it.

Looking for the next big thing in the water space, he says, “My hit rate is 2 or 3 percent, which is a typical venture capitalist hit rate. You get to plow through a lot of stuff to see what works, how it applies to your business, where the big value proposition is, where the interest is in the company. And the business models of both companies have to align.”

After almost 25 years working on waste projects with the city of San Diego, Gagliardo called it quits. A stint at an engineering firm and with a real estate developer followed before he says his “perfect job” opened up in New Jersey at American Water, revenue $2.9 billion in 2013.

What would be really cool and is badly needed, he says, are water-borne drones with a very special skill set. The drone of his dreams would be very small, less than four inches, and could be deployed into a water pipeline through a fire hydrant. Untethered, it could be driven with a handheld device, going upstream or downstream. It would spot a leak in a pipeline, stop, hover, and then fix the leak with special glue that works even under water.

“That is one of my personal favorites,” says Gagliardo, “super glue could work when it’s fully wetted, in other words, when the pipe is full of water, but that’s certainly an issue. A bigger issue may be communicating with the drone, untethered.”

The potential would undoubtedly be huge since the largest expenditure that all water utilities are facing is fixing and replacing existing underground infrastructure, namely pipes.

“The lessons I learned a long time ago and have carried through over the years I worked for American Water is to get rid of the losers fast,” he says.

Gagliardo learned the business part of the job at a later stage of his career, yet his interest in the environment sprouted early. Growing up on Long Island, he often took a boat with his father onto the South Oyster Bay, where he would notice when the sewage plant wasn’t working very well or when residents’ septic tanks were leaking. For him, these problems were obvious, even though not many people in the 1950s and 1960s would acknowledge them.

“I spoke at the first Earth Day in 1980,” says Gagliardo, “so I was more an environmentalist than a hippie, I guess.” When it was time to pick his first job, he went for a poorly paying solar company instead of a well-paying oil firm.

Following his green-leaning beginnings, Gagliardo, an engineer by trade, took a job with the city of San Diego. Starting in public works construction, he moved on to hazardous waste remediation, because that became a “big thing” in the mid-1980s. He moved to the trash business in the early 1990s, when that became a “big thing”. “I don’t know if you noticed a pattern here,” Gagliardo says. “Everything is a big thing; that’s when I get involved.”

In the mid-1990s, when the drought hit California, he was shifted to a big toilet-to-tap program. The idea: Filter and purify sewage water to make it potable again. By 1999, all the major problems were solved and the program was ready to be implemented. However, the effort was killed by what Gagliardo describes as “political reasons.”

“I was always on the bleeding edge of things nobody else wanted to work on,” says Gagliardo, “I was kind of the guy that took all the heat, and if [the program] succeeded, everybody else took credit for it. If it failed, my joke was I would get my head cut off and they’d stick me in the corner.” That reminds him of the character Jack Jeebs in the movie “Men in Black”. Jeebs is alien living on earth in the disguise of a pawn shop owner. “And when they shoot his head off, it grows right back,” Gagliardo says.

“I have an unreasonable faith in myself, and I have thick skin,” he adds. “I really like being out on the edge. And seeing what’s over the edge and bringing the news back and being the advocate for it.”

As for all those water utility pipes? They were designed to last 50 years, but are 100 years old now, and by the time they’re all replaced, they’ll be 200 years old.

“We’ll never catch up; it costs too much money,” says Gagliardo. But with the right kind of drone it could be done. He sounds ready to tackle the problem, without fear of failure or losing his head.

Is Santa Claus in a new war zone or a growth market?

Sharon Burke

Of all those in Russia's "near abroad," who nervously look over their shoulders at Ukraine and wonder who is next, one individual has more cause to worry than most: Santa Claus.

Vladimir Putin has, after all, claimed the North Pole as Russian territory, going so far as to plant a flag under the ice and establish a new Arctic military command. For that matter, Canada and Denmark also have declared ownership of the North Pole and are stepping up their polar military presence, as well.

The children of America can relax, however: Santa is not likely to get caught in the crossfire. Only someone with mystical powers could afford a significant year-round military presence at the North Pole right now. There's no actual land there, just snow and ice with more than 13,000 feet of frigid ocean underneath and summer temperatures that barely break 0 degrees Fahrenheit.

That hasn't stopped the hype, however, about a new arms race in the far north, or a land grab, or a trade war. On the other hand, what's happening in the North Pole will be consequential — just maybe not in the ways grand strategists expect.

If this keen interest in the Arctic seems sudden, in many ways it is. Much of the recent literature on the subject won't necessarily clear up why that's the case, though. In their article announcing the launch of the new Congressional Arctic Working Group, for example, Representatives Don Young and Rick Larsen point to new regional shipping, tourism and resource extraction opportunities and security challenges, but they gloss over the reason this is happening.

Here is the reason: the sea ice in the Arctic is melting. This is not an opinion; it is an observed phenomenon, documented by satellite imagery. There is variation in the amount of ice from year-to-year, but the last 20 years have seen the most pronounced thawing trend in recorded human history. This is climate change, and it's not just an academic point to score. A better understanding of why the thaw is happening will help us plan for a smarter, safer future.

So, is a melting Arctic an economic opportunity or a military challenge? An entirely new global shipping route, after all, does generate excitement in both camps. The answer to that question could determine just how worried we all should be.

The economic impact of an Arctic that is open for business could be huge. For centuries, explorers have sought a polar shortcut between Asia and Europe, potentially trimming thousands of miles off the journey. Last year, Canada finally recovered the 170-year-old remains of one of those ill-fated expeditions — the same year that as many as 91 ships safely crossed the Northwest and Northeast passages through the Arctic, a record.

In that context, it looks more sensible than sinister that China, a non-Arctic nation, is building its second icebreaker and seeking property in the region. China has a strong economic motive, given its reliance on trade. There's also China's increasingly urgent quest to diversify its energy supplies, as its import dependence continues to soar. The U.S. Geological Survey estimates (PDF) that 13 percent of the world's remaining oil and 30 percent of its natural gas are in the region, as well as minerals important to today's high-tech economy. It's not been technically or economically feasible to confirm what's there, but the surrounding geology and reserves facilitate an educated guess, and the melting ice is starting to make it possible to explore for and produce Arctic resources.

Another sign that this is an economic challenge: Shell, already having spent $6 billion in the Alaskan Arctic, has announced new plans to drill off Alaska's northern coast, despite a mishap in the area last year. Exxon-Mobil is drilling a $3.2 billion test well in the Kara Sea right now, although the project's future may be at risk due to Russia's invasion of Ukraine and U.S. sanctions.

Russia, of course, complicates what appears to be an economic opportunity. With the longest Arctic coastline and a sea route with warmer, faster-thawing waters, Russia has a clear comparative advantage in the region. Part of that advantage is its 38 icebreakers — more than double all the other Arctic countries' fleets combined — and the world's only nuclear icebreaker fleet. But here's the thing: Although Russia is noisily claiming to be re-establishing its Cold War-era polar military presence, most of its actual investments are focused on oil and gas and areas that are clearly Russian territory.

Territorial matters have the potential to be incendiary, however. These new shipping channels run through an almost fully enclosed ocean, ringed by five nations, which in the past have not really needed to iron out competing claims in the largely inaccessible region. As that situation has begun to change, some territorial disagreements have been worked out peacefully. But considering that four Arctic nations are NATO members and one is Russia, remaining claims may be harder to resolve these days, and the differences in regional presence are becoming more strategically significant.

In other words, the economic and military interests in the Arctic are not only both important, they are intertwined.

So, what is Uncle Sam to do? As an Arctic and seafaring nation, the United States also has compelling economic and military interests at stake, but not much capacity to promote those interests. And yet President Obama's Arctic Strategy (PDF) largely vows just to study the matter, in a wait-and-see approach.

Strangely enough, that may well be the best strategy, at least for now. "The challenge," as U.S. Department of Defense report (PDF) to Congress noted, "is to balance the risk of being late-to-need with the opportunity cost of making premature Arctic investments." Indeed.

The area is still difficult and dangerous to transit and that is likely to be the case for some time to come, and specialized polar equipment is very expensive. Consider Canada's ambitious plans to build a new naval base at the eastern entrance to the Northwest Passage. As those costs ballooned past $200 million, Canada quietly scaled back to a 15-person seasonal outpost with no airstrip. For that matter, the Congressional Arctic Working Group notwithstanding, it remains to be seen if Congress is willing to foot the $1 billion bill for a single polar icebreaker.

But just because it may not pay to be a first mover in Arctic investments does not mean the United States should do nothing at all to get ready for the Arctic spring. The recent appointment of a Special U.S. Representative for the Arctic could help, especially with the U.S. taking its turn as chair of the Arctic Council next year. As long as it isn't just a stunt appointment to further delay actually doing anything, that is.

In particular, the United States should continue to take action to protect U.S. borders and territory, as well as access to international waterways. The United States, working with Canada, has fairly robust northern missile defense, although it may be in a state of disrepair in places. This obviously is ripe for reinvestment, as are communications and surveillance capabilities in the region, which are sketchy at best. Those particular baseline investments may well be the best response to Russia's bold pronouncements.

As for territory and international waterways, in a pinch, the United States has the means (such as submarines) to protect those claims without a large icebreaker fleet. It would, of course, be a big help if the Senate would just ratify the Law of the Sea Convention, which a radical fringe of the Republican Party has been preventing with oddball proclamations about world government. That is rubbish, given the structure of the treaty, but the fringe's instransigence puts the United States at a disadvantage in working out conflicting Arctic claims.

One of the clearest and most present dangers in the Arctic today is actually just the uptick in maritime traffic, raising the risk of accidents. Given the long distances, harsh environment and lack of suitable equipment, this really is a disaster waiting to happen. Indeed, that alone is a good argument for another heavy icebreaker, which will bring the total in the U.S. inventory to two. It's not as exciting as a trade war or an arms race, but it is a very good reason for regional powers to pool their resources and information.

Finally, and this gets us back to acknowledging why we have this challenge, the United States should set trip wires that trigger additional investment if the situation warrants it. The most recent United Nations Intergovernmental Panel on Climate Change report (PDF) projects that the Arctic will see "ice free" summers (not locked in with solid ice) by mid-century, which means there is time to make the appropriate investments. Or maybe not. In the last few years, the seasonal ice retreat has outstripped projections and it is possible the region could see "ice free" summers within a decade or two.

The question of whether the contest for the Arctic is predominantly economic or military might be somewhat moot in that scenario. Such a profound thaw likely would mean radically accelerating climate change, with pervasive effects on the worldwide availability of freshwater and the volatility of weather patterns. It is a mark of the absurdity of the U.S. polity that some business and government leaders tout the commercial opportunities and security risks of a fully navigable Arctic, without acknowledging what it really means.

They probably want to arm Santa Claus, too. If Putin doesn't get to him first.

This article originally appeared at New America. arcticocean_ruzanna_sstock.

Beyond treaties: A new way of framing global climate action

Fred Pearce

This article was originally published by Yale Environment 360.

The recent United Nations Climate Summit in New York passed with many promises, but no firm pledges. Most notably, China's vice-premier Zhang Gaoli promised his country would peak its carbon dioxide emissions "as soon as possible," and President Obama said that next year he would publish a plan to cut U.S. emissions after 2020. On the fringes, major corporations trading in agricultural commodities grown on former rainforest land joined with governments in signing a declaration promising to halve net deforestation by 2020 and end it by 2030.

The summit never was intended to conduct detailed negotiations for a new climate treaty. Those talks will take place between now and the U.N. climate conference in Paris at the end of next year, which is intended to deliver the legally binding national commitments that a similar event failed to deliver in Copenhagen in 2009.

But behind the scenes, some are asking what happens if there isn't a deal in Paris. Or even how much it matters whether there is such a deal. Failure is possible, after all. The political winds are even less propitious today than they were five years ago.

Economic stasis continues in Europe, previously the most vocal advocate of action on climate change. Earlier this month, the European Union decided to do away with a stand-alone climate commissioner in Brussels, merging the post with the energy portfolio. The new post-holder, Miguel Arias Cañete, holds shares in an oil company and, when he was agriculture minister at home in Spain, sat in a government that cut spending on renewables, in defiance of EU policy.

Meanwhile, Germany, once Europe's climate tub-thumpers-in-chief, is in a messy transition on climate policy as it burns ever more coal, while shutting down its fleet of low-carbon nuclear power stations. Japan's emissions are rising post-Fukushima. And Russia, the world's second largest oil producer, is not about to cozy up to anyone on climate policy.

It sounds bleak. Strangely, all may not be lost. The answer may lie in Plan B — reframing the entire climate issue as one of national decision-making and self-interest, rather than global treaty-writing. A close reading of national policies shows that many countries are taking action on climate not because they have made legally binding international commitments, but because they want to.

Plan B began to emerge in the aftermath of Copenhagen. By the following year's U.N. climate conference in Cancun, Mexico, many nations with no previous formal emissions targets — including Brazil, Mexico, South Africa and China — had made their own domestic commitments. Most were about cutting the carbon intensity of their economies rather than actually cutting emissions. But it was a start.

Some targets were aspirational. But Britain passed a Climate Change Act requiring future governments to cut emissions decade by decade to deliver an 80-percent reduction in emissions by 2050 from 1990 levels.

Skeptics would point out that, without international treaties to hold their feet to the fire, future governments always could repeal laws they find inconvenient. But that may be to misread what is going on. The commitments are not about burden sharing internationally, but about self-interested domestic energy policy.

Many agree with two former U.S. senators, Timothy Wirth and Thomas Daschle, writing at Yale Environment 360 in May, that national self-interest is the only likely route to cutting emissions.

For 20 years since talks began to draw up the first Kyoto protocol — whose meek emissions targets expired at the end of 2012 without being fully replaced — negotiations have taken place around "burden sharing." Cutting emissions has been assumed to be bad for economies, so nobody has wanted to go faster than anyone else.

The United States, in particular, refused to take on any formal commitments unless emerging industrial rivals in Asia did, too. But those countries said their low, recent emissions were not to blame for climate change so far. The result: deadlock.

But suppose that is exactly the wrong way to look at the issue — 20th-century thinking when the world has 21st century technology at hand. Suppose there is no real economic penalty for being a climate good guy. And suppose that going green is actually a boon to economic growth, with the short-term costs of adopting low-carbon solutions quickly outweighed by benefits from industrial efficiency, more jobs, healthier air and more productive ecosystems.

It sounds like a utopian vision. But it is what is increasingly being argued by some economists.

Earlier this month, it was the main message of a report, "Better Climate, Better Growth: The New Climate Economy," from the Global Commission on the Economy and Climate. This is an independent body chaired by Felipe Calderon, former president of Mexico, and Lord Nicholas Stern of the London School of Economics, whose Stern Review in 2006 first opened up a debate about the economics of tackling climate change. The report's authors included researchers from two leading environment think tanks, the World Resources Institute and Stockholm Environment Institute, economists from McKinsey and others.

Their central conclusion is that low-carbon investment is a smarter way to economic wealth than high-carbon investment. It will restructure economies and societies — and even corporations — so that they enjoy better economic growth. There is no longer a burden-sharing downside. It is a race to the top. High-tech and high efficiency equal low carbon.

The report looks in detail at urban design, energy and land use, and concludes that "all countries at all levels of income now have the opportunity to build lasting economic growth at the same time as reducing the immense risks of climate change."

Denser, greener cities have lower transport costs and reduced health bills, especially for illnesses caused by air pollution. Smog illness currently reduces GDP by 4 percent in many countries, the report notes, and by more than 10 percent in China. Meanwhile, smarter and more intensive food production that brings abandoned and degraded farmland back into productive use will deliver higher yields, bigger profits and reduced carbon emissions as forest loss is stemmed. Finally, with the costs of renewables down 90 percent in the last decade, the report said, these energy sources are now competitive with coal for power generation.

In comments to reporters, no authors of the commission report said a global treaty to fight climate change would be anything other than a good thing. It would send important signals that encouraged action by governments and companies. But the report's lead author, Jeremy Oppenheim, a London-based economist at business consultant McKinsey, said a deal in Paris "is not essential. All the things we propose are in the economic interests of countries on their own terms."

Similarly, a recent report from the respected British consultants Cambridge Econometrics (PDF) forecast that the planned 60-percent cut in U.K. carbon emissions would deliver a GDP that was 1.1 percent higher than if the country stuck to a high-carbon economy. Countries, the report found, should be making these changes out of self-interest.

But just because the economics may stack up does not mean a low-carbon economy will emerge automatically. Capitalism isn't so simple.

Right now, said Stern, the markets and governments are rigged against the economically (and environmentally) optimum path to growth. The vested interests in high-carbon are huge. They are on display in the current pushback by the U.S. power industry against Obama's June announcement of rules to cut carbon pollution from the country's power plants by 30 percent from 2005 levels by 2030.

Estimates of the amount of government subsidies given to fossil fuels around the world range from the International Energy Agency's half a trillion dollars a year to the International Monetary Fund's $2.3 trillion. Even the lower figure is six times the total subsidies for renewables. According to the IMF, fossil-fuel subsidies "crowd out growth-enhancing public spending."

Moreover, pure market forces cannot counter the hidden costs of dirty fuels, such as higher health bills and environmental damage. Such subsidies and market failures, Stern said, slow growth as well as pollute the atmosphere and cause deaths. They have to be tamed. Carbon pricing is one route, institutional investors agree. Earlier this month, investors handling trillions of dollars a year called on governments to establish a stable system for global carbon pricing. They said it would reduce the risks to their investments from climate change.

All this leads Stephen Tindale, former director of Greenpeace UK, to argue in a recent report that international climate negotiations should be focused less on setting national emissions targets and more on fixing these perverse financial incentives against a low-carbon economy.

Yet despite the dysfunctional markets, green growth already may be fitfully turning into reality. Witness how major corporations consuming agricultural commodities signed up at the U.N. climate summit last week to a New York Declaration on Forests — an initiative that the World Resources Institute said "could result in more emissions reductions than removing every car, bus and plane from the U.S., China and India combined."

As part of the declaration, the companies promised to cut forest loss from their activities by half by 2020 and to end it by 2030, and to push a massive effort to restore degraded croplands — potentially preventing billions of tons of carbon emissions annually. With productive land running out, they see this as good, self-interested business as well as climate-smart.

Many governments, in varying manners and to varying degrees, also seem to see national benefits from reducing their dependence on high-carbon fossil fuels. China has reduced its annual rise in coal consumption from 18 percent a decade ago to almost zero. Coal burning is set to decline in China starting in about 2020, according to some analysts. The reasons include both the health costs of killer smog and the growing availability of cheap low-carbon alternatives, from nuclear to solar.

The new technology-minded Indian government of Narendra Modi is committed to bringing electricity to the 400 million rural Indians without power from the grid through the installation of solar panels. But Modi, who did not attend the U.N. climate summit, has a long way to go. The Global Carbon Project points out that the carbon intensity of the Indian economy is still bucking global trends by continuing to increase.

Nonetheless, the global explosion in solar power is a major reason why almost half of all new electricity generating capacity coming on stream last year was from renewables. And that trend helps explain why there has been at least a partial break in the previously lockstep rise of global GDP and CO2 emissions, which historically have increased at about the same levels.

According to a study for the European Union, in 2012 global GDP rose by 3.5 percent while CO2 emissions rose only 1.1 percent. "We are seeing a decoupling of CO2 emissions from global economic growth," said co-author Greet Janssens-Maenhout, a researcher at the EU's Joint Research Center. She may have been premature — the gap narrowed in 2013, according to the Global Carbon Project. But the signs of progress are there.

This doesn't mean the end of the climate crisis is in sight. Far from it. Atmospheric concentrations of CO2 rose at a record rate last year, due in part to nature's faltering ability to soak up the enormous amount of greenhouses gases that we emit.

And time is short. According to a new study published last week in Nature Geoscience, at current emission rates the trillionth ton of CO2 from human activity would be thrown into the atmosphere in about 30 years. That would mark the moment when many scientists say we will be all but committed to warming beyond 2 degrees Celsius, the presumed threshold for dangerous climate change.

If the economists who note the benefits of moving to a low-carbon economy are right, and if we fail to halt the danger, then politics will be more to blame than economics. But if self-interest is the route to saving the climate, then maybe we still have a chance.


The Future MBA, week 14: Creative and cooperative ideas

Giselle Weybrecht

For 100 days I am posting 100 ways that we could rethink and reimagine the MBA, to transform it into a tool for creating the sustainable leaders that our organizations and the planet need.

I’ll explore all aspects of the MBA, ranging from curriculum and research to partnerships and campus activities. Some ideas could be put into practice tomorrow while others would require a complete rethinking of the way we view the MBA.

This brainstorming of ideas is meant to encourage discussion, so please share your thoughts and comments and elaborate on the ideas you find the most interesting.

Day 92: Reflection

Most time in business school is spent learning about and analyzing the decisions that others made, the numbers that others generated and the cases that others built. The Future MBA will put more of an emphasis on students themselves and how they can develop their own self-awareness and skills as a future employee, manager or leader by tapping into and using their own experiences as a key part of the learning process. Many assignments, experiences and opportunities will focus on giving students the chance to reflect at various levels on the work that they have done in the past and how what they learn in the classroom helps them to better understand decisions they made both before and during the degree. This also will help students reflect on their actions moving forward and continue to learn from their experiences throughout their careers.

Day 93: Changing themes

Every year, despite what happens in the world around us, the MBA stays largely the same. Similar classes are taught in a similar way. How do we create an MBA that responds to the world around us today and prepares students for the world of tomorrow?

In the Future MBA schools will focus on a particular theme each year. This special program will happen in parallel to the traditional MBA but be open to a wider audience. Each school can choose its theme based on issues of importance in its communities, countries, region or internationally. This could include conflicts, political issues, environmental or social issues, even new discoveries. 

This shorter program (six months to a year) will contain a range of events, courses, conversations and projects specifically aimed at raising student awareness of that issue as it is relevant today, discussing how to move that issue forward and exploring the issue in the future. The goal would be to not just create individuals who are knowledgeable and ready to work to solve these challenges today, but also to gather momentum and act as a central space to shape discussions around that topic and move the issue forward. Students of all ages would be invited to register for these part-time programs and alumni would be allowed to return to participate in some for free.

Day 94: Shareholder engagement

Universities hold billions of dollars in corporate stock. As shareholders they have the opportunity and a responsibility to positively affect those companies and influence their sustainability policies and strategies. How do we turn universities from passive to active investors for the benefit of the universities, the companies and society as a whole?

Future MBA students will engage with faculty and staff at the business school to examine the companies the university has shares in and how they choose which shares to invest in or divest from. They will explore opportunities to vote on issues, attend annual meetings and put forth or comment on shareholder resolutions relating to social and environmental topics. They also will collaborate with other universities and shareholders to influence corporate policies in positive ways and provide useful ongoing contributions in financial capital, human resources and additional resource.

Day 95: Creative space

When it comes to solving the world’s and business’s challenges, creativity, generating new ideas, thinking outside the box and innovation are all skills that future graduates need. Despite that most business school students do not come from a traditional “creative" background, it is important that they explore how to be inspired by the world around them and to better understand how they can tap into their own creative spirit to come up with new ideas, products and projects in their jobs.

In the Future MBA there will be a creative space on campus. This space will contain movies, music and musical instruments, furniture, art and craft supplies from around the world. Established and emerging artists will be invited to share their work. It will be a highly interactive space where items will change constantly.

Students will have the chance to enter the space to explore their own creativity and different methods of tapping into it, to see what inspires them and to help them to put that inspiration to good use in their work now and moving forward. The space will be created and updated through partnerships with local museums, art galleries and art centers who will send individuals to work on campus with the students and invite the students to their spaces to explore their work.

Day 96: Reporting

Leading businesses are pushing what is possible in corporate reporting. They are increasing disclosure, becoming more transparent and reporting on issues most material to their businesses. They are experimenting with environmental profit and loss statements, integrated reporting and other formats that likely will become the norm for a more comprehensive way of reporting in the future.

Instead of following business trends, the Future MBAs will be ahead of the game when it comes to reporting. They will create, shape and test out innovative new ways of reporting which will inspire and shape the way that other organizations such as businesses and NGOs report on their activities, both in terms of quantitative and qualitative data.

Day 97: Playing

Individuals of all ages spend time playing highly addictive and simple video games. A growing number of these games aim to help solve bigger challenges in the field of sciences, using players to solve tiny bits of the problem and bringing all these tiny solutions into larger ones.

Students in the Future MBA, as well as the public at large, will have the chance to play a collaborative video game which gives them a chance, using real data, to build new businesses and explore new business models that make more sense for the planet, society and businesses. It will give players a chance to explore what really should make up a successful business and business environment. The game will be open-source and free. Researchers and students can explore solutions from the game to create new businesses or implement changes to the business environment.

Day 98: Thinkers in Residence

Researchers in universities spend many years doing in-depth analysis of topics. But what about individuals working in business who are exposed to new challenges on a regular basis and who can’t necessarily wait years or months or even dedicate that time themselves to that research?

The Future MBA will invite individuals every year onto campus as Thinkers in Residence. These could be alumni, business partners, individuals working in the community or retirees, and can choose to spend between a week and several months in this position. Through this program, individuals can identify a theme or challenge of interest to them, their community or their organization and choose to spend a short amount of time exploring this topic. Themes also can be established by the business school based on their focus areas and individuals can apply to do projects that fit in with those themes. Each project will have an outcome which will be presented to the school community and to the individual's own professional community which could result in more in-depth research or work, a prototype, an article or a plan of action.

Day 99: The cooperative

A cooperative is a business enterprise owned and controlled by the members that it serves. Cooperatives put people before profit by helping their members achieve their shared social, cultural and economic aspirations.

In the future, the MBA could become a cooperative with students and alumni making up its membership base. It would focus on helping them to achieve their educational and life goals as well as contributing to knowledge in their communities and internationally. It would provide services to serve its members' needs and take a long-term view, exploring new ideas and opportunities. Because of its governance based on balanced democratic control, it would hold itself accountable for limiting impacts that otherwise might go overlooked.

Day 100: Today and tomorrow

What will the future company, the future NGO, the future consumer, the future customer, even the future MBA look like?

In the Future MBA, students will explore these topics. In a series of ongoing discussions over the course of their program, classes of students will become Futurists, tapping into their diverse experience and backgrounds to explore, predict global trends, scenarios and opportunities they believe will become business reality throughout their careers. The course will encourage students to think about what kind of future they would like, a future that will work for the planet and society as well as for the business sector. It also will focus on the now and how they can shape and reach the desired future through the work they do post-graduation through their career choices and business decisions. This is a future that they will create, so they have the power to change it.

Top illustration by Ollyy via Shutterstock.

Oil companies quietly prepare for a future of carbon pricing

Mark Schapiro

This article originally was published by Yale Environment 360 and is reprinted here with permission.

In the winter of 2013, after mounting pressure from shareholder groups who wanted to understand the impacts of any future climate legislation, the biggest U.S.-based oil companies were nudged into a surprising revelation: "Carbon," the stand-in for carbon dioxide and all other greenhouse gases, had been given a price in the companies' internal accounting. The externalized and largely uncounted costs long associated with fossil fuels — 20 pounds of CO2 emitted with every gallon of gasoline, according to the EPA — were being given a number.

At the time, the biggest of the oil majors, ExxonMobil, reported a carbon price of $60 per metric ton to the Carbon Disclosure Project, which released the figures (PDF). Chevron, BP and Royal Dutch Shell reported a price of up to $46 per ton, and for the first time, the oil majors appeared to be lifting the lid on the accounting sleights of hand that have kept the full costs of oil hidden from public view. 

The toll of fossil fuel emissions — from the ballooning costs of crop insurance tied to climate-related weather extremes, to the ravages of sea level rise in coastal areas, to stresses on health services as tropical diseases migrate northward — is part of the discussions at the U.N. climate summit in New York this week. And the new carbon mathematics is putting a spotlight on the oil industry: Earlier this year, all four major oil companies were listed in the journal Climatic Change (PDF) as being among the 90 global businesses responsible for two-thirds of the world's greenhouse gas emissions.

None of this suggests that the world's petroleum giants are contemplating a move away from oil. It does, however, signal the emergence of a new era in which oil companies' financial liability for climate change is coming to be more clearly understood.

Engineers at Carnegie Mellon University and Arizona State University concluded, in a 2011 study published in the Proceedings of the National Academy of Sciences, that conventional cars over their lifespan come with an average of $2,000 in costs related to greenhouse gas emissions. These costs, the researchers noted, are not borne by the drillers, refiners, distributors and consumers of oil, but by taxpayers in general, who bear the brunt of the financial consequences that manifest months, years and decades later. Yet no mechanism currently exists to pay for this massive economic liability for climate change. 

Of all developed countries, Americans pay the least, by about half, for their gasoline; a $4 per gallon price at the pump looks more like $8 in Germany and much of Europe. That extra amount partly consists of environmental taxes, which are used to mitigate the pollution and public health impacts of oil, to help pay for government-subsidized research into technologies to reduce the environmental footprint of fossil fuels, and to provide more generous social services. 

In the United States, the gasoline tax essentially has shrunk since 1993, when President Clinton, egged on by Vice President Al Gore, pressured Congress to increase the gas tax to 18.4 cents per gallon. But environmental taxes in general account for just 0.8 percent of GDP in the U.S., compared with 2.4 percent in Europe, according to the Organization for Economic Cooperation and Development (PDF). That 1.6-percent difference would provide the U.S. government with about $240 billion annually in extra revenue, some economists have noted — a portion of which could be used to adapt to and mitigate the monumental costs of climate change. 

Of course, that would require setting a price on carbon. Yet with the exception of localized efforts at carbon pricing in California and, to a lesser extent, a small group of states in the Northeast, the United States so far has proved unwilling or unable to do this. 

For the oil companies, then, tallying up the costs of climate change amounts to a registry of risk — and the costs acknowledged by ExxonMobil and other oil companies are, in the words of one energy analyst, "a proxy for future climate policy." While the politics have stalemated in Washington, ExxonMobil, for example, is not assuming it always will be that way. Exxon's carbon price can be seen as a hedge against the recognition that, at some time in the future, it will be time for big oil to begin paying for the full range of costs associated with its product.

"What happens to fossil fuel companies," said Mark Trexler, CEO of the Climatographers, a consulting firm that works with companies to identify environmental risks, "when you have two Katrinas and 23 tornadoes and the world wakes up and finally imposes a meaningful price on carbon?" To not pay attention to such risks, he said, would amount to a dereliction of fiscal duty. 

"If they're not thinking about a future business model in which they're forced to internalize the costs of climate change, then they will be compromised in their ability to deliver energy services in the future," said Mikhail Chester, a researcher at Arizona State University and an author of the paper estimating the life cycle greenhouse gas costs of automobiles.

Those costs and risks are reflected in data compiled by Bloomberg, the biggest financial information provider in the world. One of the company's latest additions is a Carbon Risk Valuation Tool (PDF), a computerized set of environmental threats associated with fossil fuel and other extractive industries. For the first time, investors can toggle between two sides of the bet on fossil fuels: Choose one tab and you get a company's financial performance; choose another and you get its greenhouse gas emissions and the risks that new regulations, in the United States and other countries, could leave the company's assets untapped and underground. 

"We believe the day will come when you have full-cost accounting," said Curtis Ravenel, who helped conceptualize and design the system as the Global Head of Sustainability Initiatives at Bloomberg. "We're taking those externalities and integrating them into [traditional] cash flows and the price and earning ratios." 

The tool is set to a series of defaults that can be adjusted depending on the nature of the risk: What would happen if carbon is priced at $50 per ton in 2020, for example? Or at $20 a ton in 2030? What if a carbon price ensures that 80 percent of assets have to remain in the ground by 2030? This is the first time such metrics are integrated in ways that financial professionals can understand, allowing them to share information on risks that the oil companies themselves are integrating into their internal carbon price. 

Alan Jeffers, ExxonMobil's chief media officer, explained that the company's pricing of carbon is "a proxy price reflecting all the action the government could take to regulate the exploration, transport and processing of carbon fuels." In other words, it rises and falls based on a perception of political and public pressure for restrictions on carbon emissions.

Jeffers said that ExxonMobil has been calculating an internal carbon price since 2007, when it was far lower than it is today. The price, Jeffers said, was raised in 2009 when Congress looked likely to impose a cost on carbon through cap and trade, and it declined afterward. Now it's up again, he explained, reflecting the combination of forces impacting the risks and costs that oil faces in the marketplace: tightened mileage standards by the EPA; renewable fuel standards in California and other states; the talk from President Obama, the World Bank and others about a coming price for carbon; and rising public pressure for action on the climate. 

Exxon's internal carbon price varies widely around the world — a testament to the divisions that exist in how different countries are dealing with climate change, and which negotiators hope to resolve at climate talks in Paris in 2015. Jeffers said that the company's price of carbon is highest in the European Union, where a cap-and-trade scheme has been operating for nearly a decade and some nations are more strictly enforcing greenhouse gas limits. On the other end of the spectrum, the price is essentially zero in many parts of the developing world, where simply keeping the lights on is a priority and demands for political action on climate change have been more muted. 

Exxon's $60 per ton price — Jeffers said it recently has been revised upward to $80 — is far beyond any actual price in the U.S. market or anywhere else. In the three major carbon markets where those costs most clearly can be articulated — in Europe, California and, recently, in seven of China's most industrialized provinces — the price of carbon hovers around $10 a ton. One reason for the large difference, Jeffers said: "It's like buying a house. You need to overestimate your cable bill, your mortgage payments and all those other costs. We need to overestimate what could result from government policies."

Of course, the "house" in this case is the infrastructure of oil. And one of the most revealing aspects of the carbon pricing estimates being developed by Exxon and other oil companies is just how much they believe that even relatively high carbon prices will not fundamentally threaten their bottom lines. 

Even at $80 per ton, Jeffers said, none of Exxon's assets would be stranded. The company's own report to a group of shareholder activists in March asserted that the price would have to rise to between $150 and $200 a ton — more than 10 times its current estimate — to alter fundamental decisions about investing in oil. 

Whether it's $10 or $200 a ton, any discussion of carbon pricing still begs the question: Who pays? As noted by Severin Borenstein, an economist at the Energy Institute at the University of California, Berkeley's Haas School of Business, "If the price for carbon and the price [of oil] go up at the same rate, then the [oil companies'] profit margin does not change." 

Under most scenarios, the consumer will end up paying any carbon fees because the higher costs will be passed down to them at the pump. This is why what the government does with the revenue generated from carbon pricing is so important. If it is delivered back to consumers in the form of a rebate, or used to build better public transportation and fund research into cleaner energy sources, such revenues could offer significant public benefits. In addition, a price as low as $60 or $80 a ton could begin tilting people away from oil to other forms of energy. If drivers start switching to electric vehicles, for example, it will matter a great deal for Exxon's bottom line whether those electrons are coming from natural gas, in which Exxon also has invested heavily, or wind and solar, a sector where Exxon and other major oil companies so far have little footing. 

For now, however, Exxon doesn't see that as a realistic outcome. From its point of view, the company's market share remains steady with a price for carbon at $60 or $80 per ton because, as Jeffers put it, "Our forecasts suggest there is no viable alternative to oil." 

The challenge from a climate perspective, of course, is proving him wrong. 

Top image by Mike Mozart via Flickr.

How the Northwest is working to mainstream green chemistry

Ken Zarker

Since the Toxic Substances Control Act was passed in 1976, there has been a lack of national consensus on how to tackle hazardous chemicals. That’s meant that the states—individually and together—have taken the lead on solving global chemical policy issues like flame retardants, copper, phthalates and others.

It's particularly true here in the Pacific Northwest, where endangered salmon runs and declining populations of orca whales have given us very visible examples of the societal and environmental costs from poor policies. Washington’s state legislature has often been a frontrunner in pursuing chemical regulation – as have our nearby neighbors in Oregon and California. For many of us working to advance safer chemicals in the Northwest, it made sense for industry, researchers and educators to also take a collaborative regional approach to solving these problems.

Northwest Green Chemistry was created to connect those dots. It has tried to get ahead of regulation by working with industry to identify problems and putting those opportunities in front of researchers. As an independent nonprofit, Northwest Green Chemistry can bring the many stakeholders involved in chemicals management together on equal footing.

Often, those of us who work in hazardous materials management and sustainability will talk about “mainstreaming green chemistry” by getting companies to think about reducing or eliminating the use of hazardous chemicals when they are designing new products or processes. The ultimate mission of Northwest Green Chemistry is to ensure that, as people turn to green chemistry for answers, they’ll find the solutions and resources they need.

So far, this project is in its infancy as we talk with industry and academic groups to ensure that the opportunity we see can become a viable niche for us. We recently conducted a market survey to gather feedback on what services would be most valuable. We’re also working with academic institutions to sponsor trainings and, separately, developing curriculum for continuing education programs for professionals. We’ll take another step forward on Oct. 28 with a roundtable to gather national leaders and people from around our region.

Certainly, the talent and the drive are there – or, rather, they are here.

Northwest retailers are making strides on getting hazardous materials out of their supply chains. Manufacturers, such as the Outdoor Industry Association’s chemicals management module (CMM), are working together to share a common approach. COSMO BioRefinery is seeking to extract and sell cellulosic sugars and other biochemicals into an established market. There’s a tremendous amount of interest in reinvigorating the forest products industry via the Northwest Advanced Renewables Alliance (NARA) that is harnessing biomass for aviation biofuels and specialty chemicals. Rivertop Renewables of Missoula, Mont. just launched a new green chemistry division this month to specifically produce ingredients for consumer-based products.   

An amazing group of supporters has stepped up to serve on the board for Northwest Green Chemistry, including representatives from our region’s leading universities, manufacturers, and nonprofit organizations. Our group includes the kind of big thinkers and innovators that you need to stitch together an ambitious project like this.

What’s possible? Established centers such as the Toxic Use Reduction Institute (TURI) at the University of Massachusetts-Lowell and the Lowell Center for Sustainable Production show the impact a concerted effort can have. By bringing world-class thinking to bear on local problems, TURI has been able to have a national and global impact.

The Northwest has the same potential to lead the way, particularly on issues like alternatives to copper boat paint and eliminating PCBs in products .

The PCB issue hits especially close to home, since the toxic chemical builds up in the iconic orca whales that live in or visit Puget Sound. Although the chemical was outlawed years ago, polychlorinated biphenyls are present as a trace contaminant in many common pigments, particularly bright yellows and greens. Ultimately, this presents us with a grand challenge here in the Pacific Northwest to tackle toxics with green chemistry solutions. Northwest Green Chemistry is planning a technology symposium on green chemistry solutions to the PCB problem in 2015.

Our academic community is also stepping up. The Center for Sustainable Materials Chemistry (CSMC) at the University of Oregon is a focal point for producing the next generation of green chemists and sustainable chemistry. There’s also groundbreaking molecular toxicology research lead by Dr. Robert Tanguay at Oregon State University related to the health effects of chemical mixtures. His lab is using zebra fish to evaluate the toxicity of thousands of chemicals used in consumer products, which could lead to green chemistry innovation.

The University of Washington’s Professional and Continuing Education department will offer an online certificate program in green chemistry in 2015, giving professionals the opportunity to study the principles of green chemistry and then apply them in their workplaces.

As we lay the groundwork for our vision of green chemistry, we want it to reflect the needs and values of the Northwest. For example, the Washington Department of Ecology developed a new Alternatives Assessment Discussion Draft for use in Washington State based off the national guide created by the Interstate Chemicals Clearinghouse. The Washington guide will establish a recommended set of criteria for small- to medium-sized businesses seeking to advance the transition to safer chemicals.  

Earlier this year in the Idaho state legislature, the Health and Welfare Committee introduced a Senate Concurrent Resolution that encourages companies to avoid substances likely to be harmful and to substitute for safer alternatives wherever feasible.

None of this is to suggest that there are easy green chemistry solutions to the challenges we face in the Pacific Northwest. But it does show that there are solutions out there, economic opportunities and increasing numbers of people dedicated to solving those problems.

If you’re interested in these issues in our region, we encourage you to collaborate with Northwest Green Chemistry to see where we may find shared interests, concerns, or opportunities. Bring us your green chemistry challenges and let’s tackle toxics together.

Top image of cylinders by Olivier Le Queinec via Shutterstock

Why Americans need to ante up for water

Cynthia Barnett

This summer, a 90-year-old water pipe burst under Sunset Boulevard in Los Angeles, sending a geyser 30 feet into the air and a flood of troubles over the UCLA campus. Raging water and mud trapped five people, swamped 1,000 cars and flooded five university buildings — blasting the doors off elevators and ruining the new wooden floor atop the Bruins’ storied basketball court.

As the campus dried out, though, Angelenos seemed less upset about the replaceable floorboards at Pauley Pavilion than they were over another loss: 20 million gallons of freshwater wasted in the middle of the worst drought in California history. L.A. Mayor Eric Garcetti took heat for his earlier campaign promise not to raise water rates in a city with a long backlog of repairs for aging water pipes.

Five days after the L.A. pipeline rupture, officials in Toledo, Ohio, declared the tap water for half a million people unsafe to drink, tainted by toxic algae spreading in the warm waters of Lake Erie. As residents of one of the most water-blessed regions in the world waited in lines to buy bottled water, an issue that had held little political urgency rose near the top of Ohio’s gubernatorial and legislative races. Former Toledo mayor Mike Bell held back an “I told you so” for council veterans who’d resisted rate increases to pay for upgrades to the city’s 73-year-old water-treatment plant.

[Learn more about water at VERGE SF 2014, Oct. 27-30.]

In Los Angeles and Toledo and across the U.S., historic drought, water-quality threats heightened by warming waters and poorly maintained infrastructure are converging to draw public attention to the value of fresh, clean water to a degree not seen since Congress passed the Clean Water Act in 1972. The problems are also laying bare the flawed way we pay for water — one that practically guarantees pipes will burst, farmers will use as much as they can and automatic sprinklers will whir over desiccated aquifers.

Squeezed by drought, U.S. consumers and western farmers have begun to pay more for water. But the increases do not come close to addressing the fundamental price paradox in a nation that uses more water than any other in the world while generally paying less for it. And some of the largest water users in the East, including agricultural, energy and mining companies, often pay nothing for water at all.

As a result, we’re subsidizing our most wasteful water use — while neglecting essentials such as keeping our water plants and pipes in good repair. “You can get to sustainability,” said David Zetland, a water economist and author of the book "Living with Water Scarcity." “But you can’t get there without putting a price on water.”

Cheap, abundant illusion

Water is the most essential utility delivered to us each day, meeting our drinking and sanitation needs and many others, from fire protection to irrigation. Incongruously, it is also the resource we value least. This is true generally for both the way we use water and the price we put on it.

On the global scale, Americans pay considerably less for water than people in most other developed nations. In the U.S., we pay less for water than for all other utilities. That remains true in these times of increasing water stress, said Janice Beecher, director of the Institute of Public Utilities at Michigan State University, whose data show the average four-person household spends about $50 a month for water, compared with closer to $150 for electricity and telephone services.

Water’s historically cheap price has turned the U.S. hydrologic cycle abjectly illogical. Pennies-per-gallon water makes it rational for homeowners to irrigate lawns to shades of Oz even during catastrophic droughts such as the one gripping California. On the industrial side, water laws that evolved to protect historic uses rather than the health of rivers and aquifers can give farmers financial incentive to use the most strained water sources for the least sustainable crops. In just one example, farmers near Yuma, Ariz. — the driest spot in the United States, with an average rainfall of 3 inches per year — use Colorado River water to grow thirsty alfalfa; under the law of the river, if they don’t use their allotment, they’ll lose their rights to it.

For both municipal waterworks and those that carry irrigation water to farms, the illusion of cheap, abundant water arose with the extensive federal subsidies of the mid-20th century. The Bureau of Reclamation built tens of billions of dollars worth of irrigation and supply projects that were supposed to have been reimbursed by beneficiaries; most were not repaid. After passage of the Clean Water Act and the Safe Drinking Water Act in the 1970s, the feds doled out billions more dollars, this time to local communities to help upgrade water plants and pipes. Because ratepayers didn’t have to bear the costs, they didn’t balk at treating water destined for toilets and lawns to the highest drinking-water standards in the land.

Americans got used to paying little for a whole lot of pristine water. At the same time, many utilities delayed the long-term capital investments needed to maintain their pipes and plants. Water boards often are run by local elected officials, making decisions uneasily political. A board member with a three-year term might not vote for a water project that would pay off in year six. Officials who tried to raise rates risked being booted out of office. It was easier to hope federal subsidies would continue to flow. They did not. A Reagan Administration phase-out of water-infrastructure grants began 25 years ago. Over the past decade, U.S. Environmental Protection Agency water infrastructure funding has declined (with the exception of 2009, the year of the American Recovery and Reinvestment Act), and policy has shifted from grants to loans.

Unfortunately for water utilities, the timing coincided with the arrival of requirements to scrub dozens of newly regulated contaminants out of drinking water and record numbers of water mains and pipes bursting due to age and extreme temperatures, both hot and cold.

Playing catch-up

In recent years, municipalities have begun raising rates to play catch-up. Since 2007, city water prices have risen at rates faster than the overall cost of living. Even so, the water sector reports it is not enough to pay for an estimated $1 trillion in anticipated repair costs for buried water pipes and growth-related infrastructure costs over the next 25 years.

When it comes to meeting needs associated with growth, many of the most promising solutions are found on the demand side. Americans still use more water per person than anywhere else in the world. But the U.S. today taps less water overall than it did 40 years ago despite population and economic growth, thanks to increased efficiency and awareness. From irrigation to manufacturing to toilet flushing, everything we do takes a lot less water than it used to.

Because utilities’ funding relies on revenue generated by water sales, efficiency has many utilities up a creek and churning blame. Earlier this fall, The Washington Post published a story, reprinted in newspapers around the nation, that blamed “federally mandated low-flow toilets, shower heads and faucets” for water utilities’ financial woes. Conservation, the story said, was the cause of higher water rates and new fees.

The reality is just the opposite, said Mary Ann Dickinson, president and CEO of the Alliance for Water Efficiency, a Chicago-based nonprofit dedicated to sustainable water use. Everyone is beginning to pay more for water — but communities that conserve have lower long-term costs than those that don’t. In many cases, simply saving water can eliminate the need for costly new sources, Dickinson said. Growing, water-stressed cities including San Antonio and Perth, Australia, have saved ratepayers more than $1 billion in long-term capital costs by helping them slash water use in half. An analysis by the city of Westminster, Colo., found that reduced water use by citizens since 1980 saved residents and businesses 80 percent in tap fees and 91 percent in water rates, compared to the costs of acquiring the new water — close to $220 million on Colorado’s Front Range.

Efficiency will be the answer in many communities, although it cannot save the day in financially strapped cities that are losing population. Detroit’s emergence from bankruptcy depends in part on its ability to sell water, but it has lost a quarter of its population over the past decade. Under pressure to reduce more than $90 million in bad debt, the Water and Sewerage Department in the spring began ordering shutoffs for customers who had fallen behind on their bills, prompting a global outcry and a warning from the United Nations.

Pictures of American families bathing and brushing teeth from five-gallon buckets hold a mirror to the nation’s hydro-illogical cycle: We subsidize water for the largest users in the United States, including agriculture and energy plants, yet we do not ensure a basic amount of water for the poorest citizens.

Agriculture at the table

Likewise, efficiency doesn’t solve water-quality issues such as Toledo’s, where ratepayers could be looking at $1 billion for a new drinking-water plant advanced enough to filter out the pollutants brewing in Lake Erie, their water source. Donald Moline, commissioner of Toledo’s public utilities department, said the cost issues are opening up much-needed dialogue with the agricultural community on its contribution to nonpoint-source pollution in Lake Erie. Fueled by farming, septic systems, urban runoff and other causes, nonpoint-source pollution is the largest contributor to water-quality problems in the United States. “It used to be we just weren’t allowed to get into the agricultural causes, but given the science of this, we can’t ignore that piece,” Moline said.

Indeed, concerns over both quality and quantity make agriculture an increasingly important part of the conversation about how we value and price water, said University of Arizona law professor Robert Glennon, author of the books "Water Follies" and "Unquenchable: America’s Water Crisis and What To Do About It."

Irrigation costs differ significantly for American farmers depending on whether they operate in the West or in the East. Reclamation Reform Acts in the 1980s and 90s began to shift the costs of major U.S. irrigation projects — which move river water around the West — from federal taxpayers to western farmers, whose bill depends on an arcane mix of water rights, allocations and contracts. But in the Colorado River basin, century-old water law can still create a tragedy of the commons in which farmers risk losing their allotment if they don’t use it. To solve this waste-encouraging dilemma, Glennon advocates a regulated system of markets and trading that would allow farmers to sell their water allotments to cities in times of drought or let a manufacturer pay to convert a large farm from flood to drip irrigation in exchange for the saved water.

Groundwater presents yet another paradox of price: Rising energy costs and declining water levels in troubled aquifers such as the Ogallala in the U.S. Great Plains have helped motivate many farmers to use less water. Agricultural and industrial water users pay for the wells, pumps and energy to draw water up from belowground, but in much of the country they still pay nothing for the water itself — which in some cases has provoked a race to the bottom that can dry up neighbors’ wells and even collapse the ground underfoot. In one hot spot in California’s San Joaquin Valley, U.S. Geological Survey scientists found that steady groundwater pumping in the nut-tree region south of Merced is sinking the ground nearly a foot a year, threatening infrastructure damage to local communities.

In August, the California legislature passed a package of laws to regulate groundwater pumping for the first time in state history. But the laws won’t slow damage to aquifers without meaningful limits on groundwater withdrawals or a charge for extraction, said Zetland, the water economist. Both are tough to pull off in politically regulated systems. Florida has required permits for large groundwater withdrawals since 1972. But governor-appointed water boards are reluctant to deny them, which has aggravated aquifer depletion, drying springs and coastal saltwater intrusion in some parts of the state. For decades, various Florida councils, committees and commissions have concluded that a small fee on groundwater withdrawals — between 1 and 20 cents for every 1,000 gallons — would reduce pumping and fund water-resource protection with “minimal adverse economic impacts” to industry and agriculture, according to one analysis by Chase Securities. But the agricultural lobby keeps the idea from getting very far in the state legislature.

New approaches

Going forward, water infrastructure, supply and quality challenges intensified by droughts, floods, temperature extremes and other influences of a changing climate will require new approaches not only to price, but also ethics: using less and polluting less, recycling more, and sharing costs among all users.

At the local utility level, higher prices and tiered price structures, in which households that use more pay more, are both working to encourage conservation. Utilities are also turning to new types of bonds to cover long-term projects, such as the 100-year “green bond” sold this summer by the District of Columbia Water and Sewer Authority to finance environmentally friendly stormwater solutions.

Water-science and engineering groups such as the American Society of Civil Engineers make the case that the U.S. infrastructure crisis is severe enough that local communities cannot solve it alone; they suggest that federal investment is crucial to forestall significant costs in emergency repair and business losses.

Market fixes and agricultural partnerships are also part of the answer — especially if water law can evolve to do a better job of protecting the environment and local communities. Over the past two decades, drought-addled Australia has built the world’s largest water market, trading $2.5 billion per year and allowing the government to buy back overallocated rights and return water to nature. Price trends are up — both utility customers and agricultural users are paying more for water — while overall consumption is down. However, feared adverse social impacts may be coming to pass; researchers from Griffith University in Queensland (PDF) found governments trading “with little regard or knowledge of Indigenous interests, and many Indigenous people believe that contemporary water resource management is amplifying inequities.”

Human rights advocates often oppose water markets on the grounds that we should not commodify an essential human need. But U.S. water use and price have been so skewed for so long that market solutions may be the only politically feasible way to right them. If we are to subsidize anyone, perhaps it should be the poor: A sustenance level of water for those who need it — free or dirt cheap — and higher prices for those who want more and choose to pay. “I argue for a human right to water,” said Glennon. “If we can’t guarantee that in the richest country in the world, we are a sorry lot.”

Key tenets as U.S. water law and policy evolves, Glennon said, are making sure the environment and communities where water originates are not harmed. “It’s glacial, but we are finally seeing people do things differently,” he said. “Across California, you see block rates and municipalities paying people to rip out lawns. Price is going to give us the opportunity to do some things before crisis becomes a catastrophe.”

This story first appeared at ENSIA. Top image by simonalvinge via Shutterstock.

How Ford aims to drive down its energy costs by $7 million a year

Stephen Kennett

Ford will invest more than $25 million in LED lighting at its global manufacturing facilities — cutting annual energy use equivalent to running over 6,000 average-sized homes a year.

The LED fittings will replace traditional high-intensity discharge and fluorescent lights, and are expected to reduce Ford’s energy use at manufacturing facilities by 56 million kilowatt-hours a year. This equates to 70 percent reduction in lighting energy consumption compared to traditional technologies and is expected to cut annual energy costs by around $7 million.

According to Ford the need for maintenance also will diminish, as LED lighting has a 15-year life expectancy and studies show LED light output remains steady at less than 1 percent degradation per year over the life of the equipment, while fluorescent and HID fixtures require re-lamping in as little as two years.

John Fleming, executive vice president, global manufacturing and labor affairs at Ford, said: “We are extremely pleased to install this leading-edge technology in our manufacturing facilities worldwide. This is a long term investment in our future that highlights our aggressive approach to lead in environmental improvements and achieve operating efficiencies.

"Ford worked closely with its scientists and suppliers to investigate and closely follow the rapid development of LED lighting."

In 2011, Ford embarked on a program to lower its energy use by 25 percent per vehicle produced at its facilities by 2016. The company is on its way toward meeting that goal, having achieved a 20 percent energy efficiency already, said George Andraos, director of energy and sustainability at Ford Land.

“Moving to LED gives us impressive efficiency improvement,” said Andraos. “Ford worked closely with its scientists and suppliers to investigate and closely follow the rapid development of LED lighting. In 2013, we selected Dialight, a leading LED industrial fixture manufacturer with a global footprint, to develop light fixtures that meet Ford’s global needs.”

The roll-out began at Ford’s Dearborn Truck Plant last month and will continue through the year at 17 other Ford manufacturing facilities across the globe, including Kentucky Truck Plant in Louisville, Ky.; Livonia Transmission Plant in Livonia, Mich.; Dearborn Stamping Plant; Essex Engine in Windsor, Ont.; Dagenham Engine Plant in Dagenham, England; and Oakville Assembly in Oakville, Ont.

Recently, Ford also announced that it will work with DTE Energy to install Michigan’s largest solar carport at its Dearborn world headquarters. When completed in early 2015, the project is expected to generate 1.3 million kilowatt-hours a year.

This story originally appeared on 2degrees and is reprinted with permission. Top image of Ford auto plant in Russia by vladimir salman via Shutterstock

3 steps to bring sustainability to your supply chain

Alan Amling

According to PwC's Global Supply Chain Survey 2013 (PDF), more than two-thirds of supply chain executives said sustainability will play an increasing role in the supply chains of the future. It's clear that growing consumer demand and increasing legislation have begun to shift the perception of sustainable supply chains from "nice to have" to "need to have."

There is little doubt that production, transportation and even warehousing of goods are major impacts on an organization's total carbon footprint. As a result, it is more important than ever for companies to evaluate their current supply chain practices, not only to identify ways to reduce environmental impact, but also to reduce costs through increased efficiencies.

One of the easiest ways a company can do this is by partnering with a third-party logistics provider (usually abbreviated as 3PL, but sometimes as TPL) that can offer expertise on making the entire supply chain more sustainable. The following are three steps companies can take with a 3PL to reduce the environmental impact of their supply chain, ultimately saving them time and money.

1. Measure footprint

One of the main ways logistics partners can help companies to improve the environmental sustainability of their supply chains is by first measuring and assessing current operations. By gaining an understanding of the impact of the current supply chain through the use of tools, such as a carbon footprint analysis, companies will be in a better place to later manage a more efficient supply chain.

[Learn more about smarter supply chains at VERGE SF 2014, Oct. 27-30.]

An experienced 3PL can work with customers to develop a credible carbon impact analysis, such as one that follows the Greenhouse Gas Protocol. The result of a decade-long partnership between the World Resources Institute and the World Business Council for Sustainable Development, the GHG Protocol is the most widely recognized international tool that helps to identify, measure and manage greenhouse gas emissions. The process sheds some light on a company's carbon impact, which can help companies to properly report and thus meet regulations on greenhouse gas emissions. Additionally, verification and certification of the analysis by credible third parties provides confidence that numbers provided by carriers are credible.

A 3PL experienced with this tool can help companies through the process more easily and develop insightful recommendations on how to best redesign, reengineer and optimize current processes to create a more sustainable supply chain.

2. Manage operations

Another way 3PLs can help companies to create a more sustainable supply chain is by helping to manage their current supply chain through the implementation of optimization measures. From transportation design to organization and execution, a 3PL can help companies optimize their existing transportation and packaging operations.

Strategies for removing unnecessary legs of transportation could include shifting transportation modes, relocating inventory to optimal locations based on the customer's requirements or business needs, or co-locating value-adding logistics services (such as kitting and packaging or repair services) in a single location.

 Rob Igo via Flickr

When it comes to managing packaging operations, 3PLs can help customers to reduce wasteful shipping materials by providing guidance on package function and design. This can include identifying the most efficient packaging design and materials, or incorporating the use of packaging materials made from recyclable or sustainably sourced materials.

Managing efficiently also means managing warehouses and distribution centers in a more sustainable manner. Energy-efficient warehouse and office lighting, LED technology, warehouse and office occupancy sensors, recycling programs and green space are all elements of sustainable warehousing.

3. Mitigate impact

Finally, 3PLs can help their customers to mitigate their environmental impact in a number of ways beyond measurement and supply chain organization and management. With access to a broad range of technologies as well as transportation and warehousing solutions, some 3PLs can assist customers in implementing sustainable supply chain strategies. This includes access to transportation methods that are less carbon-intensive (such as rail or ocean modes) or partnering with transportation providers or carriers investing in hybrid or natural gas vehicles within their ground fleets.

From a technology standpoint, 3PLs can work with their customer to incorporate paperless solutions for commercial invoices and billing, as well as customs documents, to reduce overall paper consumption.

One area where a 3PL can make a particularly large impact on supply chain sustainability is by helping customers to set up efficient reverse logistics operations. By implementing processes for recycling, refurbishment or end-of-product life disposal, companies can make a significant reduction in their total carbon footprint. 3PLs that can offer these services at a centralized warehousing or distribution point can make an even bigger impact by reducing the miles traveled at the end of the product lifecycle.

After implementing these efficiencies, companies still will be responsible for some level of carbon impact. Organizations looking to reduce their impact further can work with carriers that offer customers the ability to offset the impact of their shipments by investing in environmental projects.

The value of the right partner

While the idea of creating a more sustainable supply chain may seem overwhelming for some companies, having a knowledgeable and experienced logistics partner to help with the process can make it manageable for nearly any company. To identify a 3PL best-positioned to assist in this area, companies should consider partners whose sustainability practices they look to emulate. They should ask the following questions:

Does the company value sustainability and in turn practice what it preaches? Does it issue an annual company sustainability report? Is it transparent in its sustainability efforts? Will its network and assets provide opportunities for my company to create a more efficient and sustainable supply chain? Does it have access to cutting-edge technologies and tools? Does it have a proven track record when it comes to assisting customers?

Asking these questions and taking the preceding steps with a logistics partner not only will help to ensure your supply chain is meeting the growing demand for increased environmental sustainability, but help to reduce costs and most important — reduce the impact of business on our planet, preserving it for future generations.

Top image of chain on cardboard by Christos Siatos via Shutterstock.

Dear Shannon: How can I interview for top sustainability talent?

Shannon Houde

If you have a question for Shannon, send it to

Dear Shannon,

I'm a hiring manager at a small mission-based organization based in Portland, Oregon. Our company is committed to incorporating sustainability into our bottom line and long-term strategy. We are starting to look for new talent that can lead change in all of our new hires. That said, we are feeling a bit lost about how to assess sustainability skills during the interview process. Any ideas?

Pat in Portland

Dear Pat,

As a sustainability career coach and former HR exec, I hear about the challenges of hiring the right person for corporate responsibility or impact roles from both sides of the fence. Job seekers see mountains of competition and no defined career track for the roles they want, while hiring managers see vague personal profiles and CVs and a complex, heterogeneous, career changing talent pool.

According to leading CSR and sustainability recruitment agency, Acre, whichever phase of the sustainability journey an organization is in, the individuals leading the strategy need to understand that it's not a static function. Rather, sustainability is a continually evolving business strategy that underpins the organization. For hiring managers this means that they must respond in real time to ever-changing skillsets and competencies when recruiting new talent.

How to assess core sustainability competencies

In a recent article, I outlined my top five crucial skillsets or competencies that a CSR or sustainability practitioner will need in their arsenal. Now, I’m sharing the challenging questions that really get to the heart of these competencies in a job interview context to help hiring managers sift out the gems.

If you're looking for the best talent but finding it hard to spot, or if you are the talent but struggling to land your dream job, then  read through these 5 questions and consider how they could help you to find or be that chosen gem. If you’re a job seeker, take these questions one at a time and write out your answers. They will reveal a lot.

1. Bravery and resilience: This is all about your ability to lead change in an organization, and bounce back when times get tough.

· Tell me about a time when you were challenged to stay committed to a project.

· How did you overcome your fear to take it to fruition?

· When you feel uncomfortable in a situation what do you do? Give an example.

2. Ability to balance global and local perspectives: This relates to the need to view sustainability at different scales within the organization and its markets.

· How have you been able to deliver and measure tangible impact in a global or local context?

· What are the challenges you see in being able to balance global and local perspectives?

· How could we as an organization scale up to bring our local programs global?

3. Innovative and systems thinking: This is the big picture stuff, the fitting together of the jigsaw puzzle that brings individual sustainability initiatives together into a holistic vision for the organization, the sector and the world.

· How do you see the different elements of the sustainability agenda fitting together?

· How will innovation help to develop a more sustainable economy?

4. Influencing and negotiating: This is how you work with others to achieve your objectives, your interpersonal skills.

· Give me an example of a time you had to convince someone to do something they didn't want to do?

· What is your approach to negotiating with someone strong headed?

· How would you go about getting diverse stakeholders on board for a new idea?

5. Engaging others in the on the journey on their terms: This is all about empathy and understanding for other people’s positions, and of course communication.

· Tell me about a time you had to gain buy-in from senior management and how you did it?

· How would you go about getting other departments on board for an idea for sustainability?

· What are the three key steps you would take to get others to follow you on your journey?

A sustainability lens on standard interview questions

Of course, the more standard interview questions can also reveal much about how an applicant might perform in a sustainability role. One of my favorite sources of old school interview questions and answers is this 1984 book excerpt. Not much has changed in the intervening 30 years.

Questions such as "Tell me about yourself" and "Walk me through your resume," remain a set-up to see if the candidate has done their homework and can make their recent career experience relevant to the role, company culture and organizational needs. "What do you know about the company?" is another question that helps hiring managers see how well the candidate understands the organization and why they want to work there, and if their values are aligned.

Other questions, such as, "What is one question you wish I'd asked you?" can expose the scale of a job seeker’s ambitions and give insight into their blue-sky thinking. "What you do in the first 30, 60 and 90 days of this job?" can shed light onto a candidate’s strategic approach to delivering results with diplomacy. How they'll approach the role and the internal politics is an important indicator of how they’ll fit into the existing team and be able to make progress against key performance indicators.

Front-load the tough questions

Some techniques for finding top sustainability talentsuch as the one used by leading sustainability consultancy, BSRput the tough questions right at the beginning of the hiring process. For a senior role as director of the women’s empowerment organization HERProject, the online application required candidates to give written answers to more than 10 additional questions of up to 300 words each. 

Some of the questions ranged from working with a global workforce to project management to health interventions. Here are some examples:

1. “Please describe your philosophy on working with a global workforce. Please include, how would you provide support and mentor staff, as well as understand different cultural aspects to support success.”

2. “Please describe an example of a project that you have worked on and are proud of, including: the objective, outcomes, the relationships/partners which contributed to success, and the challenges, and how you overcame them.”

3. “Describe an intervention that you have seen implemented badly. Or which had poor or limited impact. What did you learn from that experience?”

This may seem more like a graduate school application than a standard job application, but it’s a great way to screen out the talent that is not willing to put the time into a considerate application. For those that do engage, their commitment and passion shine through. 

Preparation is the key to success. Let me know whether these questions helped you recruit the right people for your sustainability team, or if they helped you prepare for an interview for your dream sustainability job.

Top image of job interview candidates by baranq via Shutterstock