Paul Hawken, L. Hunter Lovins, Amory B. Lovins - Natural Capitalism: Creating the Next Industrial Revolution

"Natural Capitalism" is an incredible book by three authors: Paul Hawken, Amory Lovins, and his wife, L. Hunter Lovins. All are connected to the environmental movement, each in a special and different way. Mr. Hawkins began as an entrepreneur in the 1960's as founder of a natural foods business. He went on to co-found Smith and Hawken in 1979, a retail company, and in 1995 founded Datafusion, a software company. His book, "The Ecology of Commerce," 1993, is a classic text on business and environment.

Amory and his wife Hunter are consultants and advisers to many large corporations in electric generation, oil, real estate, automobile and semiconductors. He started his career as an active participant in the organization called Friends of the Earth (FOE). They later founded the Rocky Mountain Institute, a non-profit firm in Colorado that does consulting and think-tank activities on the environment and business. They have published dozens of books, and have seen many of their visionary ideas become reality over the years.

I would describe the book as extremely dense---in facts, data, ideas and examples to clearly articulate what they mean by Natural Capitalism and what it means for the future. For me, it is refreshingly different that it cannot in any way be described as the common "doom and gloom" of some writers on the environment. Yet the problems of current industrialism are very clearly defined and quantified, but with more emphasis on the means at hand to solve these problems. The emphasis in their ideas is on engineering, innovation and economics, not on public policy---although it touches on that as well, in a very interesting way.

To differentiate the concept of natural capitalism the authors characterize conventional, industrial capitalism as follows:

--Economic progress through free-market systems of production and distribution, with profits reinvested to make labor and capital increasingly productive.
--Competition through bigger plants, more products, greater efficiency and expanding markets
--GDP growth as a goal
--Resource depletion leading to substitutes
--Concern for environment balanced with needs for economic growth to sustain a high standard of living
--Market forces allocating people and resources to the best and highest uses

Advances in resource exploration and extraction technology have resulted in falling costs for natural resources, encouraging a perception that there are unlimited resources, and that even if exhausted substitutes will be discovered or developed. But the authors make the point that it is like living on inherited wealth and rapidly depleting what the authors have called natural capital.

Natural capital consists of the vast store of assets produced by natural processes over the course of 3.8 billion years, like water, minerals, oil, plant life, animal life, soil and air. These assets also supply essential ecological "services" such as:

--Regeneration of atmosphere
--Flood management, water storage and purification
--Soil fertilization
--Waste processing
--Buffering against extremes of weather

The authors are advocating a new industrial revolution toward "natural capitalism" with the promise of averting scarcity, assuring abundance, and providing a better basis for social development. The new revolution will have the following aspects:

--Radical Resource Productivity--Present industry is primarily concerned with the efficient use of human resources, while waste of natural resources--water, material and energy--is rampant. The authors suggest reversing this priority---radical resource productivity, which will reduce pollution, avoid scarcity, and increase worldwide employment.

--A Service and Flow Economy--Instead of selling a product for consumers to use until it wears out and is discarded the authors urge a "service and flow" model where manufacturers offer a functional service rather than product ownership. Such as heating and cooling (or warmth and coolth) instead of an air conditioner: transportation, instead of a vehicle. Ownership of the product that provides this functionality remains with the manufacturer, and he will repair and maintain it, and then restore or recycle it in a useful way at the appropriate point in the product life to the same or perhaps to some different functionality.

--Biomimicry--Redesign industrial systems to enable the constant reuse of materials in a continuous closed loop cycle, as occurs in all natural ecological processes

--Invest in Natural Capital--Stop and reverse the destruction of the planet by investing in sustaining, restoring and expanding the stocks of "natural capital"--what the authors call "ecological services" as well as natural resources.

The authors go on to describe dozens of examples of techniques already in place that embody some or all of the above aspects. It's long and heavily documented, well organized, and the examples often read like interesting anecdotes. It stresses the familiar bad news with data, but also stresses the good news of promise and possibility, with examples that illustrate proven techniques of reversing the waste and pollution so common now. The book positively glows with optimism, not so much advocating change as predicting that the kind of changes needed are virtually unavoidable!

The examples are divided into seperate chapters on transportation, homes and industrial buildings, agriculture, and climate, as well as a chapter on community planning and structuring in accordance with natural capital principles.

The first example covered is called "Reinventing the Wheels" and predicts a wholesale transformation of the automobile industry that has already started, and is well on it's way to a "Factor Four"---four-fold---improvement in resource productivity. In the 1990's, the Rocky Mountain Institute revealed a vehicle design concept that they called a Hypercar--that is ultra light, low drag, and propelled with a gas electric hybrid engine. Such vehicles are already being marketed and achieving mileage of 60 miles per gallon. Further refinements, it is said, have the potential of achieving 200 mpg.

To further promote this approach the authors propose a system of "feebates"---administered at no net cost to the public by government. Those who buy heavy inefficient vehicles pay a fee---those who buy efficient vehicles receive a rebate! Other changes are suggested to require drivers to pay the true costs of parking, driving, road construction, maintenance, so that there would be genuine competition between different modes of transportation. That would presumably make mass transit much cheaper, and would discourage an increase in driving in the highly efficient and inexpensive Hypercars.

This is just one of dozens of concrete examples and possibilities, all very convincing and compelling. The authors then make an attempt to estimate the capital value of natural capital, and of the cost of replacing ecological services. Of course they are priceless and irreplaceable at any cost---but the authors urge assigning values for economic purposes, even if arbitrary, in order to recognize the cost to society of depleting these assets.

The authors demonstrate that there are current public policies that encourage waste. Taxation and subsidies are often structured so that they have the perverse effect of reducing the cost to users of resources, encouraging them to use them wastefully. As a result all industry is focused on efficient use of human resources and inefficient use of natural capital.

The income tax is a tax on labor, making the use of labor more expensive. The authors, much to my surprise, suggest eliminating all income taxes on individuals and corporations, and replacing that revenue with taxes on material and energy resources. With labor cheaper and resources more expensive (and more in tune with "true" costs) industry will become much more inclined toward reduced consumption of natural capital, and creation of more jobs by using more, less costly labor, while take-home wages remain the same or perhaps increase a bit!

The 326 pages of text are followed by about 25 pages of endnotes, which usually reference items listed in the following bibliography, followed by an index. Trying to track the sources for some statements I was somewhat frustrated to find that the cited source is often another writing by one of these authors, or a "private communication" with someone. In all cases the data sources cited are the writings of environmentalists, whose data has been challenged convincingly as often being exaggerated. However, for me that doesn't detract particularly from the value of the book, because the positive suggestions to correct these problems make so much sense, whether or not the problems are exaggerated.

This book is brimming with facts, figures and great ideas that are already being implemented here and there with great success. It's loaded with ideas for better design, better products, and better ways of doing business. It's a profound ecological diagnosis, a philosophical treatise on nature and technology, and an expression of faith that the means are available to preserve our natural capital for our future generations and the growing world population. It's the most upbeat book on ecology I've seen with little or nothing anyone could see as controversial. I highly recommend this book!