Professor Gunter Pauli says that an economy reaches sustainability when it is ensured that people’s basic needs are met by using what is locally available. Focusing on this, he developed a new business model to supply high quality goods at cheap prices to the market. Pauli proved in practice that this business model brought about many advantages besides business profits. He first developed the model in 1994, when he was taking part in the preparatory work for the Kyoto Protocol on climate change at the request of the United Nations.
In the last 20 years, Pauli has implemented almost 200 projects and created thousands of jobs. He proved that a business which carries out such a number of projects and provides employment can still be competitive in the international market and keep increasing their profits. It was contrary to the traditional model, where large corporations want to increase their production by seizing cheaper labor, taking advantage of the supply chain that allows a timely delivery of standard products. This traditional model leads to an increase in unemployment and widens gaps in society.
What Pauli’s model says is that individuals and enterprises should adapt to the changes in their environment by further developing their original business ideas, and creating more businesses that have a positive impact on society. If a business seeks to achieve its full potential, it can create more interconnected businesses, which would increase the total positive benefits. Pauli proved it in practice with a coffee business. A business that mainly sells coffee started using grounds from its coffee to grow mushrooms, and made animal fodder out of the waste that came from the mushrooms. It brought two additional sources of income to the coffee business.
Besides additional sources of income, it also increases the cash flow of the local economy. It increases employment and boosts the purchasing power of residents, which helps the sales of other businesses.
When financial capabilities improve, there will be fewer funds allocated for social care in the public budget, and more will be available for construction and development projects. Almost 90 percent of the value added to the price of food products comes from international and domestic transportation. If the food products are produced locally, it will remove the costs associated with transportation and allow for high quality products to be delivered at cheaper prices.
The mushrooms grown by using coffee grounds are now supplied to many cities in the world at cheap prices. Furthermore, Pauli’s model has changed the principles of many business models and resulted in initiatives such as using rock to make paper, making shoes and clothes out of coffee grounds, and growing forests on empty land. These initiatives created countless jobs that help the local economy. Why is a “blue economy” suitable for Mongolia? Pauli named the economic model based on his business model “Blue”, and says that it is a deeper concept than a “globalized economy” or “green economy”.
Green or renewable energy requires more funds from the public budget, and organic products are made at greater costs. Therefore, even though these two initiatives have been successful, they can only produce their true benefits in a prosperous country with people who can spend money on them. In contrast, a blue economy is solely based on new ideas, profitability, and creating jobs. As a blue economy has its own business model and requires a lot of costs to make a substantial change to the model, it is not suitable for large corporations. However, it offers countless opportunities to the younger generation and those who are seeking to set up a new business. A blue economy is mostly based on laws of physics such as gravity, and sees air pressure and temperature in a given local ecosystem as decisive factors.
Nature is a system that creates food and energy, and does not create any waste in the sense that any product that could be considered waste becomes the raw material for a system elsewhere. The blue economy has created many new products, such as storing electric power created by body heat and wind, toilets that do not produce waste or use water, phone chargers that do not use batteries, and red algae that can substitute for antibiotics. Likewise, Mongolians should start creating new ideas to grow forests in the Gobi and producing special products using various agricultural byproducts from livestock.
Lately, Mongolians have produced and exported heating materials using wool from sheep; soft drinks; beauty products such as creams, soap, and shampoo; and burn ointment using sea buckthorn. This is the beginning of building a blue economy in Mongolia. In early May of this year, Gunter Pauli, who is referred to as the “Steve Jobs of Sustainability” will visit Mongolia, give lectures, and be interviewed for my “defacto” series. Please read more about the blue economy at www.blueeconomy.org.