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  RESOURCE FLOWS

 
 
A typical OECD urban region of 1 million people, with a per capita income of US$ 20,000 (a regional income of $20 billion) spends about US$1 billion per year managing its energy, water, and waste flows:
 
 
 
 
These rough, conservative estimates include residential, commercial and government consumption. They represent payment streams of 5% of the regionís income, which typically flow outside the region. These financial flows are an untapped, large source of capital that could be used to strengthen the local economy, create jobs, and reduce pollution. These benefits can be generated using proven technical, financial, and organizational measures currently managing resource demand and supply. Merely offering consumer choice in purchasing electricity has already reduced family electricity costs 5-15% in several US states.[1] McKinsey suggests better power station management could save between 5-17% of electricity produced.[2] Far greater savings of 30-50% are possible, and consumption and production can be altered to use more renewable, low-pollution processes.[3]

Even if only 10% of the above example could be captured, this annual payment flow of $100 Million could be leveraged to finance up to half a billion dollars/year/region in investments in infrastructure (state-of-the-art energy systems, biological wastewater treatment, clean industrial processes, etc.). A portion of these savings could also be invested in local social development (primary education and health care, micro-credit lending, health insurance, creating new employment in resource efficiency businesses, etc.). This link between improved use of resources and social protection is critical in an age of shrinking national government budgets. Extended to the global level, a 10% saving of 5% of $40 trillion global output approaches $200 billion per year. This amount is almost three times the size of total development assistance. It is available now if we put in place the integrated approach described here, without complex international treaties and agreements, or controversial price or tax increases. How might this be done?

E-Systems will negotiate contracts with partner regions to provide them with technical assistance and working capital. For the initial country regions involved, EUR 30 Million in expenses would generate revenues approaching EUR 90 Million, over five years. This offers a 5 year 20% return on investorsí capital, and covers E-Systemsí costs and expansion. Implementing recommended strategies is clearly in the regionsí interest, as this generates large benefits, covers their costs, and improves the local economy.
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[1] The Economist, Sept. 25, 1999, p. 65; "Energy Special", in Red Herring, July 2000.
[2] McKinsey Quarterly, November 1999..
[3] Harvard Business Review, June 99.