Regional Workshop on Eco-Industrial Clusters: Policies and Challenges

A four-day workshop on Eco-Industrial Clusters: Policies and Challenges was held at the Asian Development Bank Institute (ADBI), from 8 to 11 December 2009. This training program looked at the sustainability challenges that industrial clusters face and discussed strategies for transforming industrial clusters into eco-friendly economic zones.

The workshop was organized in collaboration with Asian Development Bank (ADB), United Nations Industrial Development Organization (UNIDO), United Nations Environment Programme (UNEP), Japan International Cooperation Agency (JICA), Ministry of Environment (MOE), Ministry of Economy, Trade and Industry (METI), Eco-Industrial Development Council (EIDC), CITYNET secretariat and Kawasaki City.

Representatives from governments, mostly senior officials attached to industry, environment and local government from 14 economies as well as representatives from universities, research institute and private sector attended the workshop.

The program consisted of a series of thematic sessions designed to have different modes of training (i) Plenary session - introducing the concepts and theories of industrial clustering (ii) Learning modules - showcasing the practical examples with worksheets based on case studies, (iii) Field visit to understand the necessary and sufficient conditions for Eco-Industrial Cluster (EIC) formulation and (iv) Group discussions for developing credible EIC development strategies & leadership qualities.

The series of thematic sessions covered the following topics and issues.

• SME Clusters and sustainability challenges;
• Industrial clusters as eco-friendly economic zones;
• Improving environmental performance of industrial clusters;
• Social capital, technology and financing for EICs;
• Enabling policies for EIC transformation; and
• EIC as an inclusive business development model

An industry cluster is a group of firms, and related economic actors and the institutions that are located near one another and that draw productive advantage from their mutual proximity and connections. Essentially an EIC aims at efficiently using local resources, discarded materials and byproducts which are otherwise termed as waste, while achieving equitable development targets. Successful EICs, are made up of enterprises that constantly seek inter-firm networks, not only to conserve resources but also look for all types of innovations that bring wealth to the community. The benefit of EIC also includes enhancing social capital and employment opportunities. By setting high norms for sustainability, firms and communities in a cluster can seek joint actions for environmental sustainability and economic development.

The key foundations of EICs, as can be learned from regional experiences are inter-firm networks, enabling technologies, social capital and public policy support. It is important that these infrastructures be created simultaneously with new industries, and not after environmental problems have already developed, as has been done in the past.

Inter-firm networks shall be the main strategy to make existing clusters environmental friendly one. Integrated policy guidance, focused business leadership with clear objectives and good market orientation are essential for the success of such inter-firm networks to evolve. Although inter-firm networks has many alluring environmental attributes, which can address some of short comings of 'command and control system" or "end of the pipe' approaches, they alone are not the panacea. Multiple strategies need to be implemented.

EICs are the better targets for rapid diffusion of best environmental technologies/practices because of their capacity and capability for coordination among firms. But they take long time to over shot the mark, if not accompanied by regional and national level environmental oversights, integrated policy guidance and timely financial assistance. Effective policy coordination at national levels is needed.

The potentials are high for bottom up strategies like inter-firm networks but they have to be accompanied by social capital creation. More than several years of cluster based continuous consultation process, supportive knowledge networks and capacity building activities will create necessary momentum to enable inter-firm networks, eco-innovations and new business strategies to become a reality within a cluster.

Regional experiences show that vibrant businesses operating within an EIC have the potential to create quality jobs. EICs offer an important market niche for the constituent SMEs to position themself as progressive, innovative and sustainable. Because of high social capital, barriers are low in local industrial clusters to commercialize new eco- products, services, ideas and business models.

The business case studies and transformation strategies presented the fact that SME companies operating within the clusters can significantly increase their impact on the local economy by (a) aligning their programs and services where there are common interest and locational advantages (b) delivering the eco-products and absorbing eco-services as market oriented interventions (c) focusing their financial needs and environmental management systems as cluster based, rather than unrelated individual companies.

EICs in urban-rural fringe areas can have a unique environmental approach to wealth creation. It showed a vision in which SME clusters in disinvested neighborhoods could achieve greater self-sufficiency and create wealth for themselves if there are strong policy supports that make technology flow into the cluster with innovative financial mechanisms. However, permeation of such eco-initiatives into clusters located in inner regions tend to be slow unless accelerated by the government through infrastructure, institutional and policy support.

Generally speaking, EICs require strategic policy choices in order to make them effective as building blocks for sustainable regional development. But the nature of policy intervention of course very much depends on which type of industrial clusters, either emerging or existing, holds the greatest potential from the integrated environmental and economic stand point.

It is difficult for public policy to create new EIC clusters deliberately. Instead, policy makers should promote and maintain the enabling conditions. Public policy measures that can support EIC could originate from three main policy streams: industrial policy that inspires innovation and technology development, environmental policy that focuses on resource conservation and emission reduction, and regional development policy that seeks to stimulate necessary infrastructure investment.

Current institutional frameworks and policies that favor the development of EICs in most of the Asian countries are fragmented and uncoordinated, not as result of negligence, but due to inconsistent understanding on the presence and strategic importance of EICs. Changes in policy orientation are essential to promote the EIC as a new model for sustainable regional development. Joint efforts that cut across three main policy streams that favor co-operative, multi-stakeholder and often location specific approaches are needed to unleash the full potentials of eco-industrial clusters.

Read the summary of proceedings.