Innovating the Green Economy in California Regions California Regions A study funded by the U.S. Economic Development Administration with ith match t h provided id d b by: MacArthur Foundation, UC Berkeley Department of City & Regional Planning, Fisher Center for Real Estate and Urban Economics, Berkeley y Program g on Housing g and Urban Policy y Professor Karen Chapple, Associate Professor, City & Regional Planning with Prof. Malo Hutson, Prof. AnnaLee Saxenian, Dr. Cynthia Kroll, Dr. Larry Rosenthal, Dr. T. William Lester, Emilio Martinez de Velasco, Ana Mileva h l illi ili i d l il Sergio Montero, Anita Roth, and Laura Wiles and the students from City Planning 228/268 Innovating the Green Economy Studio i h G S di Policy & Regulation Regional innovation systems Local markets Innovation Job growth Study Data Study Data • California • Measuring the green economy – National Establishment Time Series (NETS) N ti l E t bli h t Ti S i (NETS) • E‐mail/mail/phone survey of green, traditional, and toxic release inventory businesses (Sample = 6600, N=649) • 100 interviews in six California regions y ( ) • Network analysis (UCINET software) Product vs. Process Innovation Product vs. Process Innovation 100% Product/Service Process 90% 80% Innovattion Type 70% 60% 50% 40% 30% 20% 10% 0% Green Businesses Traditional Businesses TRI Businesses Product innovation Survey results: Primary market type k 70% Private Firms 60% Private Households Local Government Share of firms 50% Other Public Sector 40% 30% 20% 10% 0% Green Businesses Traditional Businesses TRI Businesses Survey results: Primary market location k l 60% Within Your City or Region Throughout California Throughout the Country Throughout the World Share of Firms 50% 40% 30% 20% 10% 0% Green Businesses Traditional Businesses TRI Businesses Survey results: Perceptions of policy and regulation f l d l 70% 60% Share off Firms 50% 40% Positive N Negative ti Impact Not specified 30% 20% 10% 0% Green Businesses Traditional Businesses TRI Businesses Survey results: Policy impact by level l b l l 90% Federal State Local 80% 70% Share of Firms 60% 50% 40% 30% 20% 10% 0% Green Businesses Traditional Businesses TRI Businesses Survey results: y/ y g Weekly/monthly interactions with organizations Regression findings Regression findings • What predicts product innovation? What predicts product innovation? – Greater embeddedness in local markets – Manufacturing or architecture, engineering and Manufacturing or architecture engineering and design firms • What predicts process innovation? What predicts process innovation? – Older firms – “Policy shock” of AB32 and environmental “P li h k” f AB32 d i t l regulation • Regions matter, but which region doesn’t. R i tt b t hi h i d ’t Measuring Innovation: g Green Innovation Index • Idea generation – patents • Idea development – VC, SBIR/STTR grants, startups • Commercialization – gazelles Higher Explaining Regional Trajectories LA East Bay Silicon Valley Green n Innovation R Ranking San Diego County San Francisco‐San Mateo‐ Marin Orange County Sacramento County Riverside‐San Bernardino Bakersfield SD Upper San Joaquin Valley Lowe r Size of bubble = 2007 employment l t ‐4.0% 4 0% ‐2.0% 2 0% 0 0% 0.0% 2 0% 2.0% 4 0% 4.0% Annual Avg. Growth Rate of Green Jobs, 1990‐2007 6 0% 6.0% 8 0% 8.0% Green business interaction networks by region The Silicon Valley Green Network The Silicon Valley Green Network The Silicon Valley Green Network Expats from Silicon Valley in its related industries, the semiconductor and the biotech industry being the two most d d h b h d b h relevant…are adapting their talent, both personal and network talent, to a fluffy mix of ideas that are coming in the clean tech clean tech ‐‐ Silicon Valley Venture Capitalist If you’re going to be successful in the green industry you need to understand the regulations and policies that are affecting the industry from a public policy standpoint, you know, utilities, regulations etc So this is a tricky industry it’ss not like regulations, etc. So this is a tricky industry… it not like starting a dot.com or something, it needs an understanding of a more complicated regulatory environment. ‐‐ Silicon Valley Consulting Firm Silicon Valley Consulting Firm But what about distressed regions? The case of the Inland Empire h f h l d Reorganizing the Inland Empire’s economy • AB32 is kind of what got the ball rolling here in San Bernardino County. We were the first county to get sued because of AB32. .. • San Bernardino County official The East Bay Green Network But the East Bay gets a d disproportionate share of patents… h f 60% % of State Patents % of Cleantech Patents 50% 40% 30% 20% 10% 0% Silicon Valley East Bay And green gazelles as well. And green gazelles as well. 12% % of State Gazelles % of Green Gazelles 10% 8% 6% 4% 2% 0% Silicon Valley East Bay Conclusion • Both Both green and traditional firms are green and traditional firms are innovating green products and processes; • Green businesses rely on local markets and Green businesses rely on local markets and business networks; • Green businesses see public policy and G b i bli li d regulation as positive; • Green businesses are committed to staying in California. Policy Implications Policy Implications • Traditional innovation policy p y – Talent, R&D Investment, Infrastructure – System manager • Green innovation policy – Regulation – Standards – Grow market • Tax incentives (households) • Procurement – Network “manager” – (R&D)