Economics of Innovation and Conservation

This is the third blog of a series on Economics and Conservation. The previous blogs were on Ecological Economics and Conservation and a summary of what Economics has to do with Conservation at all.

When people think about innovation, they usually portray technological artifacts. But innovation is much more than that. In simple terms, it is about the capacity to change. As it goes, many conservation projects require individuals and organizations to change; to adopt new practices; to abandon others. This is where an economist with an Economics of Innovation background can come in handy.

Economics of innovation in a nutshell

Economists specialized in the economics of innovation will look at how transformations can take place, in which direction and at which speed, which knowledge is required and how to acquire it, and to what extent the context enables or hampers that transformation. To do so, they will focus on competencies, actors, networks, and institutions, trying to understand which factors might enable or constrain change.

Focus on competence building

In Economics of Innovation, one of the basic ideas is that individuals and organizations have seldom all the knowledge that they need to innovate and change. They will need to acquire that knowledge from other individuals and organizations.

This usually happens with other organizations in the same territory, in close proximity, or through established networks. But if those specific capacities or knowledge are not yet in the territory, it is important to look at which knowledge is needed and where and how can that knowledge be acquired.

System thinking

A large proportion of economists specialized in Economics of innovation have been trained in system thinking. Why? it is very simple, knowledge flows in networks. So, understanding innovation is about understanding actors, networks, and the institutional frameworks that shape the way that actors and networks interact to acquire knowledge.

Within this branch of economics, we are quite used to look, in particular at production and innovation systems. That is:

• How individual organizations are embedded in larger systems made of actors, networks, and formal and informal institutions.
• How these systems are configurated,
• How they are entrenched and
• How they can change.

Too abstract? Well, let’s have a look at applications in conservation.

Applications of Economics of innovation to conservation

Looking at industries or sectors

Transformations within the same productive activity

To succeed, many conservation interventions require changes in production activities to make them compatible with the conservation aims.

For example, actions to improve the water quality of water streams bordering land devoted to agriculture, demands a limited use of pesticides in agriculture.

Conventional conservation practices will have limited interaction with the farmers. At most, they will give some training on the importance of limiting pesticides, adopting more environmentally friendly practices, or simply imposing some rules or regulations on the use of pesticides or land in close proximity to the water. But, will they really change the farmer´s behavior?

Thinking that the farmers, after receiving training or being coerced by law will be able to immediately adopt environmentally friendly practices is quite naïf unless one considers the whole production system. This is where an economist with an innovation background can come handy.

At least, the farmers will need to learn how to produce organically, they need to find markets for their organically produced crops, they will need to comply with the organically produced certifications in order to access the official markets, and that will cost money and time.

In summary, even when transformations are possible, they require time, and, in many cases, the local communities will need to acquire the necessary skills to do so. Innovation scholars would look at the availability of training facilities, education facilities, policies, regulations that can facilitate (or hinder) the transformation. That is, how the whole system would be enabling the required transformation and, eventually, what the gaps in the current system are in terms of knowledge, actors, networks, or institutions.

Transformations into other productive activities

In the previous example, we were talking about transformations from one form of agriculture to another. Imagine when we are expecting that farmers can turn their farms into eco-tourism….as I have seen in some conservation projects.

A person that has traditionally been working on agriculture can seldom become immediately a successful hotel manager. They will be lacking the basic skills necessary for the operation of such a touristic venture. And I am not talking about sophisticated managing techniques but basic marketing, informatics, or language skills.

How can they acquire that knowledge and from where would be something that economics of innovation scholars are well equipped to analyze.

Looking at regions

In the previous discussion, I have brought examples of transformations of productive activities. That is, of particular industries or sectors. But the same thinking can be applied to transformations of regions.

Conservation organizations often require economic analysis of a particular region in which a specific conservation project is planned or has been implemented.

Innovation scholars with a regional focus can investigate, for example, to what extent a region that has been traditionally specialized in a particular economic activity, say mining or logging, has the capacity to move towards other economic activities that are more compatible with the creation of a protected area and which kind of policies could facilitate such regional transformation.

In sum

Economists specialized in the economics of innovation might have an interest in particular technologies, how they emerge and disseminate. Yes, there are those among us! But for many, innovation studies is much more than particular technologies. It is about understanding change, of organizations, networks, institutions, and ultimately systems. Those systems can be studied at the level of particular regions, or particular economic activities (I mentioned farming but could be hunting or tourism or fishing). It can even be studied at the level of consumer behavior. I am thinking now about the different campaigns by conservation organizations to reduce plastic waste, particularly in the oceans.

Understanding the system is paramount if we expect changes in human behavior as a consequence of conservation interventions or if we want to enable or support changes in a particular direction (the directionality of the system change is also something that innovation economists are starting to tackle).

But what if you are not interested in industrial or regional change but more on issues of social or environmental justice, including poverty, income distribution, or unequal trade, to name a few. Development economics deals with all these aspects related to development, which are core to conservation, as I will explain in the next blog.

Click here to read the next blog on Development Economics and Conservation.