6. Recognizing the Special Benefits of Social Capital and PlaceIf these efficiencies and distributed benefits can be achieved, then they are certainly worth striving for. But if we can't recognize the potential benefits as achievable, we're unlikely to strive towards their achievement. So what is the barrier to their recognition? It seems that the failure on the part of decision-makers to recognize the social benefits of place might be the most significant barrier of all. The principal barrier to recognizing the benefits of place might be termed a failure of the imagination. The pragmatic example of this is the assumption that finding new ways to develop the economy will necessarily entail high transaction costs. The associated assumptions are that (a) entirely new organizations will need to be formed, (b) new forms of transactions created from scratch, (c) new systems of tracking and verification assembled, and (d) new subsidies approved. A good example of how these observations might help new, place-based markets to develop is in the emerging area of achieving emissions reduction and air quality benefits. Air emissions are largely a function of excess energy use, and the strategies for reducing energy include cleaner technology (equipment, products, vehicles), cleaner fuels, and reductions in demand (locating people and what they do closer together to reduce transportation demand, designing buildings to require less energy, etc.). There is a growing belief there is a limit to how much of the problem can be addressed by strict (aka "command and control") regulation alone. The law on clean air enables the creation of a system to credit for voluntary actions, which can achieve national goals, which in turn supports the notion of a more "market-based" approach to improvement. This system has worked well in substantially reducing sulfur dioxide emissions from power plants, and chemical and metal refineries. There is interest in creating such market-based approaches to help engage a broader range of emissions sources. However the majority of further improvements will need to come from a large number of smaller sources, as opposed to the smaller number of large sources that have been the previous focus of air quality regulation. Assume we're organized. First, transaction costs associated with the means of organization are only prohibitive if we assume that the world is unorganized. On the contrary, we know that human activity is highly organized, and both social capital and business networks may be more highly evolved in the Great Lakes region than in any other part of the country. Such institutionalized ingenuity can make change happen rapidly. It took less than three decades for retail franchising to dominate small business start-ups, less than two decades for pre-paid health maintenance organizations to dominate medical insurance, and a similar period for secondary market securitization to dominate housing credit markets. There is increasing evidence that older and more geographically accessible areas with well-established networks utilize resources more efficiently, and therefore there is a "hidden asset" which can potentially be harnessed to attain environmental goals. A special opportunity may be constituted in the emerging interest in aggregating purchasing power for electricity, which could be linked to demand and emissions reduction incentives. Finally, reductions on the "supply side" are not free, and it may be that net organizational transaction costs are low compared to the costs of certain kinds of supply side improvements. For example, electricity from renewable energy in most of the Midwest will remain prohibitively expensive until demand is substantially reduced. If the costs of organization are relatively low, the advent of aggregation will enable quicker air quality and greenhouse gas improvement than can be expected from new technology alone. Adapt existing transactions. Second, not all transactions needed to envision a marketplace for emissions reduction require de novo creation. The work of many parties within the financial services community to create location efficient mortgages and insurance policies and to modify information flow and rules to recognize resource efficiency, are illustrative of a class of value-added, transaction modifications that make the most of existing systems of exchange. Evaluation work from the utility industry demand-side management programs highlighted the value of associating incentives with recurring billing cycle transactions. Work by Don Shoup at UCLA suggests that time-of-sale real estate transactions could hold the key to wholesale environmental performance commitments. 98The emerging literature on the value of credit counseling to household asset development and financial services underwriting also suggests that market behavior can change effectively with small incremental investments in information at the household and community levels. The blurring of the lines between financial services and telecommunications services and the growth of small user Internet access are but two examples of the rapid growth in information infrastructure in place. Learning new ways to verify. Third, the debate over satisfying measurement and verification requirements can benefit from analogous work within disparate fields. These range from demography (the census debate on sampling), retail market enhancement (the discovery of the aggregate purchasing power of lower-income communities), statistical process control (the shift from measuring final product quality only to measurement of work-in-progress), to industrial ecology (the identification of common assets and benefits shared among multiple parties). In all these cases, indirect, sometimes unobtrusive and less expensive measures are used to complement the very expensive, inflexible and real-time continuous assessments that have traditionally dominated each respective field. In addition, the rapid evolution of geographic information systems holds special relevance and promise for the proposed activity. Much as maps and commensuration led quickly to the development of property rights (both individual and in common), GIS systems make it possible to identify the place-based benefits of environmental quality, and the economic and environmental benefits of community improvements. Reduce the costs of transacting. Fourth, on a dollar-per-ton of emissions basis, it may actually be less expensive to target a large number of smaller sources than a small number of large ones. This is partly due to the relatively high capital cost of technological requirements for large emitters. It is also partly due to the summary effects of twenty-eight years of strict regulation (most large sources have exhausted their inexpensive options and further improvements are costly, whereas small sources are typically at the beginning of their learning curves). Finally, it is partly due to the opportunity costs of not investing close to the end-uses of energy and resources and the unwillingness to count derivative economic and social benefits which prevent effective cost-sharing across purposes, sectors, networks, and communities. Addressing the Barriers. This example and more generally these considerations suggest that a broader and more inclusive marketplace can and should be created. There are practical barriers to creating one at this time, which we believe are addressable. The evolving nature of the networked economy makes it hard to expect that the "marketplace" will easily recognize the value of place. "Dis-connection" occurs with respect to place: reconnection requires new forms of ingenuity and incentives for this to occur. Practices in which communities struggle to recognize the value of place include historic preservation, geography, community development, community organizing, and regional economics, among others. 99 This calls for social capital. Here again, existing communities bring a set of assets that make it possible to succeed. So what are the social capital and learning assets of place?
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