recent years industrial enterprises have demonstrated an increasing ability to manage energy and materials flows in an integrated fashion, these efforts have been highly atomistic, taking place primarily behind the factory gate. In-house waste products are indeed being recycled and reused with greater efficiency and creativity. But there has been little intra-industry and inter-industry coordination in materials management. In some cases there have been regulatory disincentives (e.g., the Resource Conservation and Recovery Act, or RCRA).11 In other cases, there has been a lack of awareness of the possibilities.

A systems solution to a design problem will often require new patterns of industrial organization, such as the formation of cooperative relationships among manufacturers, suppliers, and waste management providers. The creation of industrial networks can expand the scale of a firm's operations and thereby permit a firm to consider. design solutions that would otherwise not be possible. Such cross-company relationships could promote greater materials efficiency in the economy. However, it will not be easy for industry to consider such dramatic changes in its existing production networks. After all, long-standing relationships among manufacturers and suppliers may have to change, and millions of dollars may be invested in the existing infrastructure for production and distribution. Indeed, a systems approach requires a shift in perception by top management such that environmental quality is viewed not as a cost but as a strategic business opportunity.

Government has a key role to play here. First, there is the power of exhortation. Government can encourage new collaborative arrangements across industries and can provide research funds to facilitate such arrangements (e.g., the cooperative agreement among automakers, plastics suppliers, recyclers, and the federal government to explore methods of recovering automotive materials).12 Next, and probably most important, systems solutions can be encouraged either directly by regulation or indirectly through economic incentives. Recycled content regulations or manufacturer take-back requirements are examples of a regulatory coupling between manufacturing and waste management. The proposal of the German government to require auto manufacturers to take back and recycle their cars, for example, has stimulated the German automakers to rethink the entire industrial ecology of auto production and disposal. As a consequence, new relationships are emerging. Automakers will encourage their material suppliers to accept recovered materials from dismantlers and will specify the use of recovered materials in new car parts, thus "closing the loop." This approach though, may be more appropriate for high-value, durable products with complex material composition than for nondurable or disposable products.13

An alternative to take-back regulations involves measures to encourage corporate decision makers indirectly to take a systems approach by using economic instruments to internalize the costs of environmental services (examples include taxes on emissions or virgin materials use; tradable emissions or recycling credits; tax credits; or deposit refund schemes on packaging or hazardous products). This



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