Letter from Paris Part 3: Innovation Policy
by Scott Matthews

I promised to finish this thread in my last column. I am sure that we will all enjoy the return to information warfare discussions. I would like to thank those of you who have supported me in reading and responding to this series on the environmental implications of information technology.

In this final column of the series, I will talk about how and why ICT (Information Communications and Technology) is so important, especially for innovation, and summarize my thoughts.

ICT is the focus of much innovation policy around the world. Innovation policies generally seek to promote the development and diffusion of technologies that are perceived to play an important role in economic development. They can take the form of demonstration projects, targeted support for research and development, or more process-oriented policies such as public-private partnerships and research networks. Increasingly however, such programs seek to integrate broader issues such as environmental concerns and sustainable development.

One particular example of a program that seeks to combine the benefits of development and investment in ICT with improved environmental quality is the Finnish Environmental Cluster Research Programme. While these programs differ from environmental policy instruments, they represent an innovative approach to balancing societal needs with the desire to grow and expand economies.

Inventory the Positive and Negative

Technology is a double-edged sword, capable of simultaneously degrading and improving environmental quality. For example, ICTs use significant amounts of energy. However, electronic sensors can be used to better monitor and manage energy use. Thus, technology (and ICT specifically) leads to both problems and solutions for many of the world's principal environmental concerns.

The continued integration of ICT within society and social structures has several potential types of environmental consequences. First, it will generate direct technological effects (e.g. increased productivity, energy efficiency by integrated systems). Second, there will be indirect effects by changing the behavior of people and structures of organizations (e.g. telecommuting). Finally, they may also improve the overall abilities of society (e.g. by using computer models and information to make better environmental and sustainability decisions) to manage and protect environmental resources.

In a previous column, I talked about the environmental implications of online versus retail shopping. One of the primary trade-offs associated with this technology is increased use of air and ground transportation services to deliver products. A potential longer-term impact of this shift in travel modes is not only increased congestion at the margin, but also increases in fleet sizes of the truck and air courier companies delivering products. Of course, increasing the number of trucks and planes will only exacerbate regional ground and air traffic problems.

Despite the example above, it remains generally unclear what the real substitution effects from ICT will be. The changes will certainly transcend simple ideas like "Physical to Digital" or "Transport versus Land." The net effect of ICT on such factors as energy consumption, land use, and travel still demands careful study. Analysis of the overall effects must be done with a system-wide perspective.

Despite the significant environmental problems associated with designing and manufacturing ICT products, existing research suggests that the most important environmental phases in the life cycle of these products are generally the use and disposal phases. These are, of course, the only two phases where consumers have a significant 'hand' in affecting the overall implications of ICT. While manufacturers need to continue to pursue energy efficiency improvements on these products (e.g. motivated by programs such as US EPA's Energy Star), consumers also need to be informed of the significant electricity use of these products. For some products, the consumption of electricity over its life comes primarily from "standby mode", rather than when in active use. Consumers need to be reminded to unplug or disconnect products when not needed for long periods of time. In addition, consumers need to be given full information about the environmental implications of their products when they become obsolete. Existing awareness campaigns may improve this situation, but consumers need to be continually educated in this area, and also given economic incentives to 'do the right thing' with these products.

Track Ownership and Fate of ICT Devices

There are many positive and negative impacts from ICT- most of which are not yet fully understood. A primary limitation in this area is a surprising lack of data on ownership, use, and management of ICT around the world. This 'data gap' represents a significant challenge to researchers seeking to determine the implications of the use of ICT since it is generally unclear how many respective devices are in use around the world. As a result, it is unclear whether the 'net effect' is positive or negative. The best possible strategy is, therefore, to continue to monitor and assess the use and deployment of ICT throughout the world in attempt to anticipate the implications before they unfold. An obvious mechanism to improve data collection and availability is by using improved ICT methods, such as asset management and smart inventory systems. In addition, funding needs to be made available across the world to estimate the dynamic effects of the rapid changes taking place, to better understand where the likely problems will appear, and to redesign policy before that takes place.

Teach People to See the Whole Picture

A singularly important short-term goal should be to 'normalize' international awareness and understanding of the challenges facing the world resulting from ICT. While most people in OECD member countries are aware of the potential economic benefits of computerization, few understand the potential implications discussed in this report. Without even a basic knowledge of the potential 'downside' of widespread ICT deployment, it will be difficult for society to make informed decisions over time.

For these reasons, education is very important. There needs to be a transfer of knowledge to all appropriate parties. An example of a current educational campaign is the American Electronics Industry Alliance (EIA) approach to informing the public of non-disposal alternatives for electronic equipment. However, this campaign is relatively passive, and will most likely go unnoticed for a majority of the population. Thus educational activities should be tightly integrated with incentives and social goals for the responsible management of ICT. An example would be an improved educational campaign at retailers and/or included in every piece of new equipment that directed consumers towards Internet or telephone resources containing information on alternatives to disposal.

Reevaluate Policy

Governing bodies need to reevaluate their environmental policy regimes in light of the challenges and opportunities presented by ICT. On the one hand, the far-reaching substitution effects (at the level of inputs into production and at the level of product choice) that are arising have implications for our prioritization of environmental impacts. The "underpricing" of some environmental impacts needs to be addressed. On the other hand, falling information costs have implications for all aspects of environmental policy from design, to monitoring and enforcement. Moreover, there are important implications for broader public participation and environmental governance more generally.

We are entering a new era of history, where ICT will connect many people around the world with most of the information created to date by mankind. This information will be more personal, and at the same time more globally applicable. In such an information-intensive world, it is critical that the right decisions be made.

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