Shared Value Creation( E_IBA3_SVC) lecture notes and summary
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Course
Shared Value Creation (E_IBA3_SVC)
Institution
Vrije Universiteit Amsterdam (VU)
This documents consists of lecture notes and summaries of Shared Value Creation course which is part of Minor Sustainability: Management and Innovation.
Shared Value Creation
Lecture 1
Intro — The Role of Technology and Productivity
Sustainability
- Concept and challenge that is not new
- Many de nitions that are not helpful, but they all emphasise several
aspects
- Limits to growth (after Meadows et al.: Club of Rome)
- Intergenerations aspects
- Transitions (behavioural, technological)
The concerns
- Industrial waste (e.g. pollutions of rivers)
- Consumer and commercial waste (packaging, scrap)
- Non-regenerative resources (exhaustibility, oil, gas)
- Regenerative resources (e.g. shing)
- Topics:
- Climate change, air quality, geopolitical tensions, global
dependencies, inequalities (of access and ownership)
Towards a solution
- Care of future generations
- Central role for institutions (at local and global level)
- New ways of thinking and perceiving
- Seeing systems
- Collaborating across boundaries
- Creating beyond reactive problem solving
- Need for solid evidence base
Intermezzo — on collaboration
- True but also di cult
- See, for example, dutch initiatives beta-gamma interaction
- Di erent languages
- Energy e ciency paradox
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,- Need to merge technology and behaviour
The european and dutch context
- Emphasis on smart, sustainable and socially inclusive growth
- Netherlands laggard
- Policy highly volatile
- Several initiatives to foster technological change
- From Kyoto to Paris to Trump and beyond
Growth, environment and technology
- Close connection with Grand challenges course
- Need to understand link between growth, emissions, material use, etc
- First step towards empirics — country or rm as a production function
- A simple decomposition
- So emissions decomposed into:
- Volume
- Technology (energy intensity)
- Sectoral composition
Key messages
- Limits to growth unless sectoral transformations towards less energy
intensive sectors or improvement of energy productivity
- Drivers
- Innovation
- Prices
- Trade
- Changing preferences
- Essence of literature on the Environmental Kuznets Curve
Measurement — Data
- Combinations EU KLEMS and IEA yielding consistent dataset
- EU KLEMS developed for productivity analysis
- IEA for energy data
- Long time series (1987-2005)
- Many sectors including services
- Agriculture, 25 manufacturing industries, 23 service industries
- Energy use in ktoe relative to value added
- EU-15 plus four new member states, USA, Japan and South Korea
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, Towards explanations
- Low energy prices — Dutch disease type of explanation
- Uncertainty — partly caused by policy
- Advent of ICT — especially in the service sector
- Specialisation in response to international trade
Lecture 2
Technology and Energy E ciency Paradox
The energy e ciency paradox
- Key question — why are (seemingly) pro table technologies not adopted
- Topics:
- Net present value perspective
- Measurement problems
- Barriers to adopt
Net present value framework
- Linked to internal rate of return (r for which NPV = 0) — useful to rank
alternatives
- Critical role of discount rate
- Adopt if NPV > 0 or IRR > critical
discount rate
Towards dynamics
- Di usion patterns of technologies (S shaped di usion curve)
- Two dominant explanations
- Probit or rank models emphasising gradual improvement of
technology and heterogeneity of rms
- Epidemic models emphasising the gradual di usions of information
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, Energy e ciency paradox
- Evidence that there are many technologies around that are not adopted
while being pro table at reasonable critical discount rates
- Calls for an explanation for which there are several candidates:
- Measurement problems
- Barriers that rational model does not incorporate
Explanations energy e ciency paradox
- Explanations within the simple NPV framework
- Hidden investment costs
- Hidden annual costs
- Hidden bene ts
- Hidden critical discount rates
More advanced explanations
- Information as precondition
- Capital as precondition (SMEs)
- Uncertainty and option value of waiting
- Non-rational behaviour
- Complementarities / network e ects
- Learning
- Vested interests
On information and capital constraints
- Particularly relevant for SMEs
- Role for banks, venture capitalists, pensions funds, etc
- Role for labelling, information campaigns, etc
Investment under uncertainty — 1
- The basic logic — Net Present Value again
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