.I. Cleaner Prod. Vol. 5, No. 1-2. pp.

51-65, 1997
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ELSEVIER

Creating by-product resource exchanges:

strategies for eco-industrial parks

Ernest A. Lowe
Indigo Development, 6423 Oakwood Dr., Oakland, CA 94611, USA
Internet: elowe@indigodev.com Web: www.indigodev.com

Many industrial ecologists have focused upon industrial ecosystems and eco-industrial parks
as a key strategy for implementing industrial ecology. Some researchers have emphasized
developing networks of by-product exchange among co-located companies. This is one among
many options for the greening of industrial park design. This article reviews a range of
methods for supporting the creation of exchange networks in new eco-industrial parks.
Development teams working with established parks or industrial regions can adapt many of
these approaches to these other settings. In either case, a central recommendation is to
respect the self-organizing nature of the process and to focus on setting conditions that
enhance that process. 0 1997 Elsevier Science Ltd.

Keywords: industrial ecosystem; eco-industrial park; industrial symbiosis

Introduction includes concern for issues such as the extension of

In 1989, Frosch and Gallopolous, two General Motors
executives, coined a term that has inspired innovation
around the planet: ‘industrial ecosystem’. They wrote’:
..the traditional model of industrial activity-in which individual
manufacturing processes take in raw materials and generate products
to be sold plus waste to be disposed of-should be transformed into
a more integrated model: an industrial ecosystem. In such a system
the consumption of energy and materials is optimized, waste gener-
ation is minimized and the effluents of one process...serve as the
raw material for another process.
The story of Kalundborg, an industrial ecosystem in
Denmark, has become the premier case illustrating that
industry can coexist with nature in a more benign
manner while generating bottom-line benefits.* Erich
Schwartz and Karl Steininger in Austria have identified
a larger, more complex pattern of by-product exchange
in the Austrian province of Styria, suggesting that the
pattern of inter-plant exchanges may occur often; but
without self-awareness by the participating firms*.
The concept of industrial ecosystems is one aspect
of the emerging field of industrial ecology (IE). I,? is
much broader than this quest for eco-eficiency.? The
field basically enables multiple stakeholders to view
the system they share as a whole and plan action to
tune it to natural systems in an integrative way. This
*The plant managers at Kalundborg are the first to admit that they
have made only a modest beginning to improving environmental
performance.
tAs defined by the Business Council for Sustainable Development
and by research in cleaner production promoted by the United
Nations Environment Program’s Industry and Environmental
Activity Centre.
product life and the closely allied strategic shift toward
selling services rather than products.
This article will concentrate on the inter-plant net-
working aspect of IE, focusing on strategies and
methods for recruiting participation in a by-product
exchange.
Gertler gives a more specific definition of industrial
ecosystems than Frosch and Gallopoulous in his disser-
tation on the conditions for developing this sort of net-
work3:
An industrial ecosystem is a community or network of companies
and other organizations in a region who choose to interact by
exchanging and making use of byproducts and/or energy in a way
that provides one or more of the following benefits over traditional,
non-linked operations:
?? Reduction in the use of virgin materials as resource inputs.
?? Increased energy efficiency leading to reduced systemic energy
use.
?? Reduction in the volume of waste products requiring disposal
(with the added benefit of preventing disposal-related pollution).
?? Increase in the amount and types of process outputs that have
market value.
Gertler makes a valuable distinction between two
basic IE strategies for moving towards a closed-loop
or cyclical industrial system. One focuses on products
themselves through product policy, life-cycle assess-
ment, design for environment, and product-life exten-
sion. Action in this mode is independent of location
and tends to focus within a company or industry. The
second IE strategy seeks to optimize materials and
energy flows among facilities within specific regions
or industrial ecosystems. The focus is on the inputs

J. Cleaner Prod., 1997, Volume 5, Number 1-2 57

Strategies for eco-industrial parks: E. A. Lowe
and outputs of a network of production systems in
different companies and agencies.
The two approaches are largely complementary ways
of increasing resource efficiency and reducing pol-
lution. However, at times, managers and designers will
need to decide on trade-offs in costs and benefits
(environmental, technical, and economic) between
them. For example, a power plant staff may want to
consider fuel input or process changes that reduce or
eliminate by-products the plant sells to other companies
(gypsum and fly-ash). The trading of wastes as by-
products is not a good in itself if there are more
effective waste reduction solutions upstream. In specific
cases, participants may have to analyze trade-offs
between the environmental, social, and economic bene-
fits of alternative solutions and their implications for
the sustainability of the community and its companies.
Efforts to create industrial ecosystems fall into two
broad categories: those working within the boundaries
of a specific industrial park or estate, and those work-
ing with industries in a municipality or broader region.
In the Fieldbook for the Development of Eco-lndus-
trial Purks4, an eco-industrial park (EIP) is defined as:
A community of manufacturing and service businesses seeking
enhanced environmental and economic performance through collabor-
ation in managing environmental and resource issues including
energy, water, and materials. By working together, the community
of businesses seeks a collective benefit that is greater than the sum
of the individual benefits each company would realize if it optimized
its individual performance only. The goal of an EIP is to improve
the economic performance of the participating companies while
minimizing their environmental impact. Components of this approach
include new or retrofitted design of park infrastructure and plants,
pollution prevention, energy efficiency, and inter-company partnering.
Through collaboration, this community of companies becomes an
‘industrial ecosystem’.
In exploring strategies for the EIP, we have inte-
grated the resource exchange concept into a compre-
hensive menu of strategies for improving environmental
and financial performance. These strategies include4:
A waste management utility in the park may assume
responsibility for all wastes without present market
value (with site-wide licensing/permitting).
Facility design and construction emphasizes energy
and water efficiency, use of renewable energy
sources, environmentally benign materials, and ease
of disassembly and reconstruction. Design of park
infrastructure follows the same approach.
Site-wide information services link the set of compa-
nies in a self-organizing system for managing their
joint activities.
The industrial park management company facilitates
this information flow and picks up the management
activities needing a central focus (such as infrastruc-
ture maintenance, the waste management utility, and
provision of common services).
Can industrial ecosystems be developed
There are as yet few data on the feasibility of deliber-
ately creating a network of companies utilizing each
58 J. Cleaner Prod., 1997, Volume 5, Number 1-2
other’s energy and materials by-products (an industrial
ecosystem). Our lead examples, Kalundborg, Styria,
and major petrochemical complexes like the Houston
Ship Channel, developed spontaneously, not as the
result of policies and strategies based on IE. However,
there are strong precedents for companies locating in
parks or regions where they will be near suppliers or
customers, and, in fact, this is one of the rationales
for industrial parks.
Several authors have suggested that industrial
ecosystems that apply the full range of intra-plant
innovation and inter-plant collaboration will improve
environmental and economic performance, individually
and collectively.
Such initiatives should yield significant cost-savings
for companies, build greater property value for the
developer, and generate new revenues for the pro-
perty’s management through provision of shared ser-
vices. At the same time, the total environmental burden
will be lower thanks to reductions in pollution and
more efficient use of resources4v5.
The organizing team
While industrial ecosystems must be largely self-
organizing, there is a significant role for an organizing
team in educating potential participants to the opport-
unities and in creating the conditions that support the
development. Doing this in a bounded industrial park
or estate is somewhat easier because there is a develop-
ment team (for a new park) and usually a property
management business, both of which can benefit econ-
omically from improvements in the performance of
companies locating in the park. This means there ‘is a
self-interested focal point for organizing the exchange.
Developing a resource exchange (and other environ-
mental initiatives) in a broader industrial region may
require creation of this organizing entity if there is
no industrial development authority. So far, university
researchers and personnel from economic development
and environmental agencies have taken this responsi-
bility. Local industry associations and multidisciplinary
consulting organizations can also serve the organizing
function.
Leadership for the first such initiative-at Bumside
Industrial Park in Nova Scotia--emerged from a multi-
disciplinary team based at Dalhousie University’s
School for Resource and Environmental StudieG. The
Baltimore Development Corporation has taken that role
in this town’s 1000 acre project, supported initially by
an R&D team from Cornell University. In Rotterdam
Harbour, a team from Erasmus University and local
consultants is supporting 50 major corporations in the
INES initiative to create by-product exchanges. The
Brownsville Economic Development Corporation has
collaborated with Texas Natural Resources Conver-
sation Commission (the state EPA) in creating the
EIP there.

Strategies for forming a resource exchange
within an EIP
Many businesses benefit from the proximity or co-location of func-
tions that are closely related to, or rely upon, the production process.
This reduces production costs for goods and services by eliminating
unnecessary transportation movements and, in the case of high-
technology industries, by creating an intellectual and mutually rein-
forcing creative environment.6
The common-sense value of companies functioning
as an industrial ecosystem, exchanging energy and
material by-products has proven quite appealing.
Kalundborg’s example has inspired development pro-
jects in Europe, Asia and North America seeking to
emulate this ‘industrial symbiosis’ in Denmark.
This discussion of strategies for supporting develop-
ment of by-product exchanges will be focused on
development of new industrial parks. However, the first
strategic recommendation is that an exchange within a
bounded property will prove more effective if it is
embedded in a community or regional exchange net-
work because even industrial parks are not closed
systems. Many of the ideas we suggest will be useful
for development of non-industrial park exchange net-
works.
Positioning the EIP
The eco-park may be presented as a niche approach
to land-use and business clustering, much like high-
tech industrial parks (which can, of course, also be
developed as eco-parks)6. The EIP niche offers to
potential tenants a green public image combined with
bottom-line advantages. It is only a variation on a
familiar recruitment strategy: seeking companies in the
supply chain of an anchor tenant.
In financing and marketing an EIP, the design team
should emphasize the demonstrated economic and
environmental benefits of design strategies such as
energy efficient facility design or a park water recyc-
ling system. Cutting costs for tenants through higher
efficiency and shared services will add to the value of
the park. The development feasibility study will evalu-
ate a whole range of design options like these and
determine how many can be incorporated and maintain
the financial viability of the project. Many of them
may add significantly to its competitiveness.
Some developers and development finance people
suggest the resource exchange strategy could be a
potential stumbling block. In their view, a strategy
targeting companies that can use each other’s by-
products could make it difficult to gain financing.
Investors might see this method of targeting as uncon-
ventional, increasing the risk of an empty park. If the
exchanges create too much interdependency among the
companies, the failure of one or two critical links
could- damage the performance of the whole network
in an EIP. This perception could be an obstacle to
recruitment as well as investment (A. Goldschmidt,
personal communication, 1995).
However, developer John Clark argued strongly that
J. Cleaner Prod., 1997, Volume 5, Number
Strategies for eco-industrial parks: E. A. Lowe
the resource exchange strategy is actually quite conven-
tional (J. Clark, personal communication, 1995):
To me, the most interesting piece of economics is economic geogra-
phy. In this field they are looking at the benefits of geographic
focus and co-location in places like Silicon Valley, the Route 128
corridor in Boston, Austin and its high-tech industry, or Hollywood
and the film industry. These ideas from economic geography are the
normative condition in industrial real estate development, not the
abnormal. The idea that this strategy sets up a ‘dependency’ is just
part of the existing natural order. Companies are inter-dependent
by nature.
A certain amount of redundancy in recruitment might
be useful to reduce the probability of failure of criti-
cal links.
Organizing for self-organization
In Kalundborg’s by-product exchange, or industrial
symbiosis, companies are linked in a web of trades of
materials, water and energy. This arrangement evolved
spontaneously as a series of bilateral deals driven in
part by regulatory demands, not as a planned system.
In other words, environmental regulations made it
economically sound to turn some major wastes into
products and exchange them locally. Pairs of compa-
nies organized themselves into an elegant system of
exchange, with market values defining their new
relationships. They estimate that, so far, the costs of
the infrastructure for the exchanges have been repaid
twice over.
Economic markets are complex, self-organizing sys-
tems. At Kalundborg the companies organized them-
selves through market-based deals, and there is still no
higher level organization managing their interaction.
This suggests that parks or regions seeking to recruit
companies to form by-product exchange networks must
not over-plan. Strategy must be closely tuned to market
forces, utilizing industrial databases and information
networks to enable companies to discover the benefits
of co-location in the park.
At the beginning, a recruiting team may create a set
of target industries based upon the area’s existing
industrial mix, work force, markets, and resources.
Recruiters can brief candidate industries on the concept
of a resource exchange network in the park and com-
munity. Early targets might be companies that would
benefit particularly from having their unmarketed
energy and materials consumed as by-products; for
example, many food-processing plants generate waste
heat, water, and organic materials. Another target
would be plants that can use the currently unmarketed
by-products of the area’s existing industrial base, such
as a solvent refinery.
The basic responsibility of a recruiting team is to
support candidate companies in exploring the develop-
ment of feasible exchanges and helping identify likely
additional recruits who could be trading partners to
them. This has to be a self-organizing process, with
guidance and information from the recruiting and mar-
keting team.
1-2 59
Strategies for eco-industrial parks: E. A. Lowe
Steps in analysis of the by-product exchange strategy
A recruiting team can work with local and state econ-
omic development and environmental agencies to deter-
mine the potential value of this strategy in marketing
an EIP. The steps include:
1. Analyze the material and energy inputs and outputs
of major industries in the area.
?? composition and nature of flows of materials
and energy;
0 amounts;
?? distribution of flows in time (steady, periodic,
episodic, or irregular);
a material and energy quality (consistency over time
and purity).
2. Assess the potential of collecting and pooling small
quantities of some materials to create flows suf-
ficient to market. (A possible local business devel-
opment opportunity.)
3. Disseminate information locally and as part of
recruitment package and check for matches with
existing businesses.
4. Determine material or energy processing required
to achieve quality requirements.
5. Identify potential customer industries (as candidates
for recruitment) to utilize existing material or
energy flows.
6. Define volume requirements of potential customer
industries.
7. Establish relative importance of by-product
exchange in the overall recruiting strategy.
8. Test recruitment of industries identified. On basis
of results, adjust the strategy.
An area’s existing industrial base can help define
likely candidates for EIP recruitment. Existing compa-
nies in the neighborhood of the site (or in the larger
community) should be surveyed to determine their
primary inputs, potential by-product outputs, and will-
ingness to participate in a resource exchange network.
An economic development agency might collaborate
with consultants or with a local university or college
engineering department to conduct such a survey.
Analysis of this information will suggest industries that
could benefit from location in proximity to other plants.
This survey may also identify new business develop-
ment niches for intermediate companies that process
major wastes into usable feedstock.
The anchor tenant option
A typical development practice is to seek a major
anchor tenant to serve as attractor by its prestige and
potential for other firms to be suppliers or customers.
In an EIP the major inputs and outputs of this anchor
will help define the search for the next round of
companies, those capable of using its by-products or
supplying it with theirs. Examples include a pulp and
paper mill, a food-processing facility, or an electricity
generating station. Once this first major company has
signed a contract to locate in the park, its staff will
60 J. Cleaner Prod., 1997, Volume 5, Number 1-2
probably be able to help identify recruitment candidates
who fit well with it. After several other companies
have committed, there will be a richer mix of potential
exchanges, which will define the next wave of recruit-
ment.
‘Cities developing comprehensive solid waste man-
agement strategies and waste transfer stations suggest
a potentially useful variation of the anchor tenant
strategy. Local trash collection trucks deposit their
loads at these stations for sorting and transfer to land-
fills and recycling companies. Such a transfer station
could provide a solid anchor facility for an EIP. It
would provide raw materials for other EIP companies
turning wastes into industrial feedstocks, construction
materials, and various end-user products. The inputs
and outputs of this round of companies would then
create niches for further recruitment (A. Goldschmidt,
personal communication, 1995).
The larger exchange network
Exchanges of by-products within a park can be sup-
ported by embedding them in effective community,
regional or state waste exchange programs. This
broader market will give greater resilience to the pat-
tern of trades, maintaining alternative suppliers and
customers to step in as business conditions (and
companies) change.
Creating the conditions for an EIP exchange
network
Whether or not the by-product exchange strategy plays
a major role in an EIP will depend in large part upon
the self-organizing interactions among companies who
agree to participate as well as relationships with future
companies. The recruiting team cannot control these
interactions, but it can offer the conditions that will
help companies discover the value of cooperation
(Table I).
Table 1 Conditions which facilitate cooperation in an industrial
park
??A clear statement of the park’s vision and performance
objectives
??Screening of candidates to attract high-quality companies
??Methods and information to support companies in seeking
by-product trades
. Flexibility in recruitment strategy
??Assurance of continuing support for the exchange network
Clear vision. Marketing materials and presentations
must provide a clear statement of the park’s vision,
values, and performance objectives. Candidates need
to know what the community expects of them, as well
as what they can expect from the park management
and local authorities. In addition, presentation of case
studies will demonstrate the economic and environmen-
tal values of resource exchanges (as well as other key
ElP strategies).

Screening. Prospective companies will want to know
they can trust the other tenants to perform capably as
suppliers or customers, as well as in all matters of
environmental management. This requires the recruiting
team to do intelligence gathering on candidate firms
beyond the usual economic performance criteria. How
do they treat their suppliers and customers? What is
their environmental record and vision? How do they
relate to their communities?
Methods and tools. Candidate companies will need
support as they consider the value of by-product trading
as one factor in their site selection. Recruitment confer-
ences would enable firms to explore potential
exchanges, while learning about other EIP strategies.
This will also allow company personnel to test the
idea of collaborating with neighboring plants and
experience the type of candidates the project is
attracting. Depending upon the culture or participants,
the conference might include a session in which parti-
cipants role play firms in an operating EIP-dealing
with possible breakdowns and creating strategies for
recovery from them.
A potentially valuable tool for the recruiting team
and prospective tenants would be an evolving computer
model of the exchange network, supported by materials
and energy databases. This would enable simulation of
process interactions within the potential network of
companies, step-by-step. The survey of community
industries and a commitment by an anchor tenant
would define initial input needs and by-products that
other companies might consume. The Brownsville
Economic Development Corporation in Texas is work-
ing with Bechtel Corporation to develop this sort of
model for the EIP there.
However, a recruiting team should not depend too
heavily on this sort of simulation. Kalundborg man-
agers emphasize that their personal interactions were
vital to building the trust and business relationships
that are the foundation of their exchange network.
The recruiting conference could support this creation
of trust.
Flexibility. As in any industrial development,
recruitment strategy will have to adapt as the organizers
learn what works and what doesn’t. Each new contract
may shift targeting to some degree. A major food-
processing plant, for instance, might generate demand
for steam and outputs of biomass and heated water.
These input and output requrements would suggest
niches for recruitment.
Assurance of jhre support. Companies who recog-
nize the value of being in a by-product exchange
network will want to know that EIP management will
be committed to maintaining the system. Future recruit-
ment to fill vacancies, assistance to firms that have lost
a by-product supplier or customer, and coordination of
exchanges outside the EIP are some ways to meet this
need. Each company could also play a role in a self-
J. Cleaner Prod., 1997, Volume 5, Number
Strategies for eco-industrial parks: E. A. Lowe
managing entity similar to a condominium owners
association to work with the EIP management.
Challenges and risks in creating by-product
exchanges
Developers, investors, property management, and com-
pany management will want to assess the potential
risks of implementing a resource exchange strategy.
Some of these challenges include:
Companies using each other’s residual products as
inputs face the risk of losing a critical supply or
market if a plant closes down or changes its product
mix. To some extent, this risk can be managed
as with any supplier or customer relationship (e.g.
maintaining contact with alternative suppliers and
writing contracts insuring reliability of supply and
including recourse if obligations are not met).
Proprietary information could become available to
competitors. Information about a company’s inputs
and outputs can be used to understand and copy
proprietary production processes. Waste exchanges
usually do not name the source of materials until a
buyer wants to connect with them; but in an EIP,
it would be easier to identify the source of materials
in exchange. Since trades are likely to be bilateral,
each company could determine how much infor-
mation to disclose beyond what the regulations
require.
Uneven quality of by-product materials could cause
damage to equipment or quality of products. The
handling of this issue is a fairly standard contracting
procedure for any supplier relationship. Dealing with
a supplier in an EIP would be no different. Both
park management and tenant companies would need
strong quality control standards and processes.
Exchange of by-products could lock in continued
reliance on toxic materials. The pollution prevention
solutions of materials substitution or process rede-
sign should take priority over trading toxics within
an EIP site. The commitment of companies to the
EIP’s performance objectives will keep this basic
pollution prevention principle active. Smaller compa-
nies should have continuing support from park man-
agement and environmental agencies or consultants
in finding ways to eliminate toxics from their oper-
ations.
Possible innovations in regulation to enable EIP
development mqy not be allowed by regulatory
agencies. Even if they are adopted, ideas such as
site-wide permitting may be attractive for smaller
companies, but could be a disincentive to larger
ones. In either case, they will have to be designed
so that the whole park will not be liable for possible
infractions by one company.
The regulatory changes needed to support
_ .
EIP devel-
. _. ._
opment are in line with current trends in regulatory
policy. It may be possible to design umbrella permits
I-2 61
Strategies for eco-industrial parks: E. A. Lowe
for different groups, so that companies with very differ-
ent levels of risk would be under different permits.
Creating the broader context for energy and
materials exchange
Because industrial parks are not closed systems, it is
important to support e$%ctive community, regional or
state waste exchange programs. This may require some
organizational innovations to develop a high level of
materials reuse.
A US EPA report on waste or resource exchanges
lists 53 state or regional networks involved in facilitat-
ing trade of industrial by-products. They publish, in
print and/or electronic form, lists of materials available.
US EPA has also formed the National Materials
Exchange Network, an electronic on-line service mak-
ing information from 42 of these state exchanges avail-
able nationally’.
Many of these exchanges serve primarily as passive
suppliers of information. Some also act to develop
markets for specific wastes, connect potential buyers
to suppliers, and provide training or technical assistance
in recycling. Most are limited by their non-profit status,
relatively low budget and small staff’.
Two possible options for creating effective means
for facilitating the exchange of surplus resources are
brokers and investment recovery services. (See Gertler’,
for a detailed discussion of the role of brokers and
value-adding networks in industrial ecosystems.)
The broker in an industrial ecosystem
A broker may take responsiblility for maintaining the
cohesion of a broader exchange network as well as
for sales and marketing. The by-product exchange
broker would have economic self-interest in dis-
covering new opportunities for bilateral exchanges and
facilitating their occurrence. The broker would help
companies perceive their common opportunities and
explore opportunities for increasing effectiveness of the
whole web of exchanges (although the deals would
likely remain bilateral).
There is a potential downside to depending on brok-
ers. Since they usually work on commission, they have
no incentive to seek reuse of lower value materials.
They tend to focus on higher value by-products.
Investment recovery
A new field of management, investment recovery, takes
a more systemic approach to ending waste. This is an
integrated business process that identifies, for redeploy-
ment, recycling or remarketing, non-productive assets
generated in the normal course of business. These
assets include:
?? idle, obsolete, unused or inoperable equipment,
machinery and facilities;
?? excess raw materials, operating inventories and sup-
plies;
62 J. Cleaner Prod., 1997, Volume 5, Number
construction project residues;
machinery, equipment and fixtures in facilities
scheduled for demolition;
off-grade, out of specification or discontinued pro-
ducts;
waste stream and process by-products.
Investment recovery specialists develop strategies
and procedures to recapture highest value from all
surplus assets in a company or community. They seek
ways to reduce operating and disposal costs, ways of
preventing the waste, and markets for redistributing the
by-products for increased economic value. Practitioners
work with a broad range of projects, from industrial
plant or military base closings to disasters. Phillips
Petroleum*, the Investment Recovery Association,
BASF-US, and MCI Telecommunications are among
the companies that have adopted this approach.
An investment recovery firm could integrate the
above functions into a comprehensive strategy for an
EIP, for an industrial area, or for a whole community.
If the firm’s fees were based on a retainer plus percent
of savings and/or revenues, it would have an incentive
for supporting this holistic approach.
An investment recovery firm could also negotiate
technical assistance from universities, federal labs, and
environmental pollution prevention and energy
efficiency programs. With client companies it would
target unutilized supplies that need this research input
in order to be marketable. It could also recruit the
right providers. The firm could take on the role of
negotiating with regulatory agencies to define con-
ditions for reuse of materials presently restricted.
Recruiting for a broader by-product exchange
One key to transitioning an existing industrial park (or
region) into an industrial ecosystem is to first link the
existing businesses at the site and then fill critical
niches with new businesses that will enable or increase
the effectiveness of the exchange.
This assumes consensus among the tenants regarding
the mutual benefits of developing symbiotic exchanges
of materials, energy, and information. Company sur-
veys and audits can provide valuable data to guide
this process.
This initial survey will indicate any obvious
exchange opportunities and highlight ‘missing pieces’
which, if present, would enhance the viability of the
industrial ecosystem. This can lead to a list of ‘tar-
geted’ prospects, which the economic development
agency can recruit. Such prospects may be valuable
because of what they need (e.g. there is a by-product
now available at the site, from one of the present
tenants), or what they can provide (e.g. a by-product
stream useful to one of the present tenants).
An industrial ecosystem is a dynamic entity; the
participant’s market conditions will change in coming
years, causing them to introduce new products, and
cease the production of others. New materials will be
introduced; old familiar ones will disappear. Compa-
l-2

nies, too, will come and go. So, this challenge of
‘niche filling’ and of recruiting firms with particular
products and/or by-products will never end. It is just
part of the natural life history of an industrial ecosys-
tem.
An EIP creates niches for business
development
Many facets of EIP operation open specific opport-
unities for developing new businesses or attracting
firms that would support the functioning of a materials
and energy exchange. Other aspects of EIP design
suggest further opportunities.
Some business opportunities in an EIP include:
??decomposer firms practicing recovery, recycling,
and reuse;
0 remanufacturing plants;
??environmental monitoring and information firms;
0 transportation services;
0 environmental management services.
The ‘scavenger’ ana’ ‘decomposer’ niches. CBtC et
al. have identified the need for potential ‘decomposer’
companies in the established industrial park at Bum-
side5. (These are metaphoric equivalents of the organ-
isms in an ecosystem that turn dead animal and veg-
etable materials into a consumable form.) The
decomposer niche includes companies that consume
otherwise unusable wastes, processing them into usable
feedstocks and companies that take apart equipment
and market reusable components and materials.
In terms of technologies, decomposer plants would
utilize recovery technologies that allow extraction of
valuable materials from waste streams (e.g. extracting
metals from liquid or solid wastes) and recycling tech-
nologies that prepare a by-product for reuse (e.g. shred-
ding plastics). These processor companies play a useful
intermediate role and are especially important where
they accumulate small flows of residues from compa-
nies and generate economically useful masses. A sol-
vent recycler is one example of such a processor.
New decomposer industries could be incubated at
EIPs to prove the concept and demonstrate their techni-
cal and financial viability. By incubating or recruiting
firms in this category, an EIP may fulfill better the
goal of becoming a closed-loop system, optimizing the
reuse and recycling of surplus products or materials.
Remanufacturing plants. Remanufacturing fillllS
offer potentially strong export opportunities for well-
situated industrial parks. Many newly developing coun-
tries (such as Vietnam) seek to leverage limited capital
by purchasing used capital equipment. An environmen-
tal objective is served by extending the life of products
(and the energy and materials invested in them). Only if
the rehabilitation process includes upgrades for energy
J. Cleaner Prod., 1997, Volume 5, Number
Strategies for eco-industrial parks: E. A. Lowe
eficiency, process control, and pollution prevention,
do the resulting products demonstrate environmental
and economic benefits beyond extending the product’s
life.
Environmental monitoring and information sys-
tems. A company in an EIP could assume the role of
independent auditor of environmental performance and
provide feedback to individual companies, EIP manage-
ment, and the community. This firm would operate and
maintain monitoring systems and an EIP information
system linking all companies. It could also provide
third party reporting which is required in many volun-
tary programs.
Transportation services. Van lines, shuttle services
from terminals, and car-pooling offices can all reduce
the environmental burdens of single-driver automobile
transport.
Environmental management. Small-to-mid-size firms
particularly may benefit from outsourcing aspects of
their environmental management tasks to consulting
and training companies. Permitting, training, and
reporting are some of the duties that open business
opportunities for local firms.
Value-Adding networks
An advanced concept of business networks called
Value-Adding Partnerships9*lo or Flexible Networks
offers small-to-mid-size companies in an industrial eco-
system important advantages. With this model, several
businesses cluster (physically or ‘virtually’) around a
broker/coordinator company in order to leverage
resources. This collaboration enables the cluster to
compete more effectively with much larger companies
in national and global markets. The network may also
conduct joint R&D and product development or procure
common goods and services for members. Flexible
Manufacturing Networks have demonstrated success in
Italy, Denmark, and some areas of the USA3*10.
This concept is very complementary to our definition
of an EIP as a community of companies and to the
strategy of developing by-product exchanges within
that community.* Flexible Networks suggest that it is
possible to provide conditions to facilitate such inter-
firm collaboration.
At least 15 states in the USA have started programs
to support flexible network development. For instance,
Oregon’s Office of Economic Development program
has created a training program for network brokers
and offers grants supporting development of Flexible
Networks. Several networks there function in environ-
mentally related fields. Local community colleges or
university extension programs could provide similar
*Cornell University has made such networks a core ingredient in its
ecological industrial park concept and its work supporting projects
in Baltimore and Rochester.
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Strategies for eco-industrial parks: E. A. Lowe
training. State or local economic development agencies
could provide seed grants similar to Oregon’s”.
Continuing dialogue on regulations, permits,
and zoning
The developer of a traditional industrial park needs to
carefully watch emerging trends in regulation, permits,
and zoning. Early EIP teams may go beyond this to
help create the trends. From the earliest days a project
will need to be in dialogue with federal, state and
local regulators, the community’s planning departments,
and future tenants. The questions to be discussed
include’*:
How can regulatory agencies enable innovations in
environmental management such as site-wide or
umbrella permitting?
To what extent is it possible (and advisable) to
establish the whole park as the regulated entity?
What are the implications of tenant companies out-
sourcing some environmental management functions
to the park management company or third parties?
What changes (or special permits) in water, waste
water and solid waste regulations and ordinances
will be needed to permit by-product exchanges or
shared treatment facilities in the park?
Will the project require changes in current zoning
to allow the mix of industries needed for such
exchanges?
Can federal and state agencies certify cleanup and
clear liabilities to permit redevelopment of contami-
nated brownfield sites?
Umbrella permitting
The idea of site-wide or umbrella permitting could
ease the burdens of environmental management for
companies as well as regulators. However, it is a
solution that raises a number of critical issues. Would
each plant be liable for the non-compliance of any
plant under the permit? Would it make sense to lump
together large and small companies, or those with very
different levels of potential exposure to liability?
Establishing an EIP regulatory ‘association’ would
be one effective way to manage regulatory permitting
and compliance matters. Through the association, each
EIP tenant would pay a weighted up-front cost and
monthly fee based on its level of regulated releases.
Some of the regulatory association’s funds could be
leveraged against future environmental liabilities. When
considering joint liability, the association could exercise
the authority to fine or remove tenants if they remain
in non-compliance.
Another way of resolving the issues with site-wide
permitting is to design umbrella permits as administrat-
ive structures that leave potential liabilities in the hands
of each member. The companies would establish limits
for the group as a whole, with distribution of these
limits negotiated among those under the permit.
64 J. Cleaner Prod., 1997, Volume 5, Number l-2
The EIP management could be the administrator,
monitoring environmental performance, handling regu-
latory reporting, and providing feedback to company
personnel. A goal of this system would be to reduce
time devoted to regulatory issues by companies and
regulators. As long as the environmental performance
for the EIP as a whole was within targets (both regulat-
ory and self-imposed), companies would have more
flexibility in managing individual performance. At the
same time, peer pressure rather than external policing
would create the sanctions needed to regulate plants
that are outside of limits.
Another useful variation is to create different
umbrella permits for different groups of companies,
depending on their size and potential exposure to liab-
ility.
Conclusion
Projects in North America, Asia, Europe, and Latin
America are exploring the feasibility of creating indus-
trial ecosystems under a variety of labels: industrial
symbiosis, industrial clusters, environmentally balanced
industrial complexes, and eco-industrial parks. Other
articles in this issue give specifics on a number of
these efforts. Some are new industrial park develop-
ments with a broad agenda for improving environmen-
tal and economic performance, including resource
exchange. Some are seeking to develop by-product
exchanges among firms in existing industrial regions.
In the next years, action research on these projects
will determine the feasibility of explicitly creating by-
product exchange networks and uncover the critical
success factors in the process. It is likely that within
a decade such industrial ecology strategies will have
become standard business practice thanks to the econ-
omic benefits they bring companies and society.
Acknowledgements
Indigo Development colleagues Stephen R. Moran and
Douglas B. Holmes participated extensively in the
development of the ideas expressed in this paper, as
did Sheila Martin of Research Triangle Institute. The
article is based upon work completed to write the
Fieldbook for the Development of Eco-Industrial Parks,
and The Source of Value (an executive briefing and
sourcebook on industrial ecology), both reports pre-
pared by Indigo Development for the US Environmen-
tal Protection Agency under cooperative research agree-
ments. Although the research described in this article
has been funded wholly or in part by the United States
Environmental Protection Agency’s Environmental
Technology Initiative, under assistance agreement
CR 822666-01, it has not been subjected to the Agen-
cy’s peer and administrative review and therefore may
not necessarily reflect the views of the Agency and no
official endorsement should be inferred.

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