Here’s a way for governments to buy positive outcomes

Some of the toughest social problems can be solved through community-driven outcomes contracts – C-DOCs – which provide incentive for innovation.

Image result for policy options: Here's a way for governments to buy positive outcomes

Can a little-known practice called “outcomes purchasing” generate solutions to social, economic and environmental challenges? We believe the answer is yes. Through a form of outcomes purchasing we call community-driven outcomes contracts (C-DOCs), governments, communities, investors and the charitable sector can collaborate in transforming seemingly intractable problems into opportunities for inclusive growth. Moreover, the soon-to-be-launched $755-million federal Social Finance Fund presents Canada’s social sector with a powerful new tool for financing such work.

First, let’s consider the status quo. Governments provide grants and contracts to social-purpose organizations (social enterprises, nonprofits and charities) to deliver programs that are closely tracked on the basis of activities or outputs: how many homeless people sheltered, how many people enrolled in addictions treatment programs and so on. However, short-term fixes that alleviate suffering do little to address the conditions that create such problems. At worst, they foster dependency.

In contrast, C-DOCs set targets that social-purpose organizations are then funded to deliver. They provide an incentive to innovate: to iteratively test, evaluate, adapt and scale evidence-based approaches. Whether the issue is homelessness, chronic disease or greenhouse gas emissions, providing financing in a way that rewards results can accelerate systemic shifts.

C-DOCs are similar to social impact bonds (SIBs), in that investors provide upfront capital to a social-purpose organization to implement a new approach to a problem. If successful, an outcomes purchaser — usually a government — pays back the investors. However, C-DOCs have several important differences from SIBs. First, community priorities inform and drive the projects, and thus accountability is not just to investors and outcomes buyers but also to community stakeholders. Second, C-DOCs might include, and indeed require, a community engagement and development phase supported by grants, as well as the seconding of technical expertise to social-purpose coalitions.

Let’s look at two examples in which our organizations are involved.

Jobs + renewable energy = economic reconciliation

Winnipeg-based Aki Energy is an Indigenous-led social enterprise founded in 2013 to build relationships with First Nations and train community members to do geothermal installations. Aki replaces expensive, noisy and polluting diesel generators in First Nations communities with geothermal systems that meet community heating and air-conditioning needs, lower utility bills, reduce GHG emissions and create good jobs in the process. Aki has installed systems in over 400 homes and community buildings in the northern Manitoba communities of Peguis, Fisher River, Sagkeeng and Long Plain First Nations. Originally, it worked with Manitoba Hydro’s Pay-As-You-Save program, receiving $20,000 in upfront capital investment for each installation, recouped through a long-term charge on utility bills — thus benefiting communities, taxpayers and the environment.

However, in 2016, Aki Energy hit a roadblock. Federal bureaucrats weren’t convinced that Pay-As-You-Save was the right program for the delivery of large-scale energy transformation on reserves, and they halted their involvement. After unsuccessful efforts to challenge this ruling, Aki co-founder Shaun Loney and Ian Bird, president of Community Foundations of Canada (CFC), worked with the McConnell Foundation and Raven Indigenous Capital Partners to develop the community-driven outcomes contract that now helps finance Aki’s operations.

By definition, a C-DOC must meet needs that have been prioritized by communities. In this instance, those needs are skills training and job creation, lower utility costs, reduced dependency on social assistance — and the completion of geothermal installations. Raven Capital is an Indigenous social finance intermediary focused on revitalizing Indigenous economies. Several foundations and the communities themselves are providing upfront investment, and CFC is the initial outcomes buyer, with additional purchasers set to come onstream via a larger outcomes fund.

Healthy food + social enterprise = reduced incidence of diabetes

Food insecurity is an acute problem for many Indigenous people in Canada’s North. By several measures, Nutrition North Canada — the freight subsidy program intended to reduce the cost of food in northern communities  is not working. One result is runaway rates of type 2 diabetes, afflicting 17 percent of on-reserve First Nations individuals versus just 5 percent of the general population. An Ontario study showed that caring for one person with diabetes entails $10,000 in extra health spending annually without considering expenses like air transport and medical support, which are higher in remote communities.

In the Manitoba community of Garden Hill (population 2,600), diabetes treatments cost $2.6 million annually and the Nutrition North subsidy is nearly $1 million. To qualify, food must be flown in from the south — locally raised food gets no support. It’s a system designed for poor outcomes: expensive and (often) unhealthy food, erosion of the local food economy, escalating rates of diabetes and burgeoning health care costs. Outcomes purchasing is designed to tackle this sort of wicked problem.

Part of the solution is to revive the local food economy. With support from a consortium of foundations and provincial agencies, Aki Energy’s sister enterprise, Aki Foods, worked with elders and other leaders to create the Meechim Project. Employing local residents, it has established a farm with a poultry operation, an orchard and an irrigated vegetable garden. It sells healthy food at prices lower than those at the freight-subsidized monopoly retailer.

Raven Capital is working with First Nations communities, foundations, governments and private sector participants from Manitoba and PEI to design C-DOCs that will finance improved health and employment outcomes in Garden Hill and similar locations. 

Governance for outcomes

The federal government’s new $755-million Social Finance Fund gives Canada a powerful tool with which to co-invest public capital in systemic social innovation. We believe C-DOCs can deepen the fund’s reach and impact. With additional capacity building and R&D support, communities and a diverse range of social-purpose coalitions will soon have access to repayable capital to address a wide range of challenges.

Governments are key outcomes buyers and can send important signals to markets, including through the use of C-DOCs. But when it comes to collective challenges like mitigating and adapting to climate change or advancing economic reconciliation with Indigenous peoples, governments cannot act alone. Corporations have important roles, too — through social procurement and investment in outcomes-focused social enterprises. Trustees of foundations, university and hospital endowments, public pension funds and Indigenous trusts must accept that in our current circumstances, the exercise of fiduciary duty entails more than maximizing financial returns. It means investing in sustainability, equity and social cohesion, and resilience. This in turn requires improved facility with behavioural economics, evidence-based policy-making and smart metrics.

C-DOCs cannot solve problems by themselves, but in the hands of leaders in all sectors — public, private and community — they can help to accelerate societal transition at multiple scales at this critical time. SOURCE

The Billionaires Are Getting Nervous

Bill Gates and others warn that higher taxes would lead to lower growth. They have their facts backward.

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The editorial board is a group of opinion journalists whose views are informed by expertise, research, debate and certain longstanding values. It is separate from the newsroom.

Bill Gates in New York on Wednesday.
Credit…Calla Kessler/The New York Times

When Bill Gates founded Microsoft in 1975, the top marginal tax rate on personal income was 70 percent, tax rates on capital gains and corporate income were significantly higher than at present, and the estate tax was a much more formidable levy. None of that dissuaded Mr. Gates from pouring himself into his business, nor discouraged his investors from pouring in their money.

Yet he is now the latest affluent American to warn that Senator Elizabeth Warren’s plan for much higher taxes on the rich would be bad not just for the wealthy but for the rest of America, too.

Mr. Gates, the co-founder of Microsoft, suggested on Wednesday that a big tax increase would result in less economic growth. “I do think if you tax too much you do risk the capital formation, innovation, U.S. as the desirable place to do innovative companies — I do think you risk that,” he said.

Other perturbed plutocrats have made the same point with less finesse. The billionaire investor Leon Cooperman was downright crude when he declared that Ms. Warren was wrecking the American dream. Jamie Dimon, the chief executive of JPMorgan Chase, complained on CNBC that Ms. Warren “uses some pretty harsh words” about the rich. He added, “Some would say vilifies successful people.”

Let’s get a few things straight.

The wealthiest Americans are paying a much smaller share of income in taxes than they did a half-century ago. In 1961, Americans with the highest incomes paid an average of 51.5 percent of that income in federal, state and local taxes. In 2011, Americans with the highest incomes paid just 33.2 percent of their income in taxes, according to a study by Thomas Piketty, Emmanuel Saez and Gabriel Zucman published last year. Data for the last few years is not yet available but would most likely show a relatively similar tax burden.

The federal government needs a lot more money. Decades of episodic tax cuts have left the government deeply in debt: The Treasury is on pace to borrow more than $1 trillion during the current fiscal year to meet its obligations. The government will need still more money for critical investments in infrastructure, education and the social safety net.

This is not an endorsement of the particulars of Ms. Warren’s tax plan. There is plenty of room to debate how much money the government needs, and how best to raise that money. The specific proposals by Ms. Warren and one of her rivals, Senator Bernie Sanders, to impose a new federal tax on wealth are innovations that require careful consideration.

But a necessary part of the solution is to collect more from those Americans who have the most.

And there is little evidence to justify Mr. Gates’s concern that tax increases of the magnitude proposed by Ms. Warren and other candidates for the Democratic presidential nomination would meaningfully discourage innovation, investment or economic growth.

The available evidence strongly suggests that taxation exerts a minor influence on innovation. Experts have an imperfect understanding of what drives innovation, but taxation isn’t in the same weight class as factors including education, research and a consistent legal system.

Congress has slashed taxation three times in the past four decades, each time for the stated purpose of spurring innovation, investment and growth. Each time, the purported benefits failed to materialize. President Trump initiated the most recent experiment in 2017. The International Monetary Fund concluded this year that it had not worked.

Moreover, while higher tax rates may weigh modestly against innovation and investment, that calculus is incomplete. It ignores the question of what the government does with the additional money. It also ignores the possibility that higher taxes could result in more innovation.

A study of American patent holders found that innovators tend to come from wealthy families, to grow up in communities of innovators and to receive high-quality educations in math and science. Mr. Gates, one of the most successful entrepreneurs in American history, fits the profile: He grew up in an affluent family and received the best education money could buy.

The implication of that study, and related research, is that public investment, funded by taxation, could give more kids the kinds of advantages enjoyed by the young Mr. Gates.

There is no doubt that it is theoretically possible to raise taxes to prohibitive heights: If people had to pay a tax of 100 percent of the next dollar they earned, they would be likely to call it a day.

But the alarm bells are out of all proportion with Ms. Warren’s plan. Describing his concerns on Wednesday, Mr. Gates at one point suggested he might be asked to pay $100 billion.

The Warren campaign calculates that under Ms. Warren’s plan, Mr. Gates would owe $6.379 billion in taxes next year. Notably, that is less than Mr. Gates earned from his investments last year. Even under Ms. Warren’s plan, there’s a good chance Mr. Gates would get richer.

To his credit, Mr. Gates has said that he thinks the wealthy should pay higher taxes. But that’s not how he behaved on Wednesday. He can demonstrate that he’s serious about tax increases by setting aside the hyperbole and engaging in principled and factual debate about the details. SOURCE

 

Top tech CEOs warn Canada’s ‘future economic prosperity is at risk’ in letter to federal leaders

Leader of companies employing 35,000 Canadians urge parties to foster innovation

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The CEOs of more than a hundred Canadian technology companies have penned an open letter to the four major federal party leaders, asking them to step up to the plate when it comes to fostering Canadian innovation.

The letter, addressed to Liberal Leader Justin Trudeau, Conservative Leader Andrew Scheer, NDP Leader Jagmeet Singh and Green Leader Elizabeth May, says the parties need to develop economic policies that allow the Canadian tech sector to more easily access talent, growth capital and new customers.

“We’re writing because Canada’s productivity is lagging and our future economic prosperity is at risk,” the letter reads. “We want to work with all parties in this election to address this challenge.”

“If you look at what’s currently occurring on the political platforms, there isn’t much talk about innovation or wealth creation as being a key (topic) of this economic discussion, about Canada and its future,” said Benjamin Bergen, executive director of the Council of Canadian Innovators, which organized the letter.

The CEOs add that their companies employed more than 35,000 Canadians last year, exported to 190 countries and generated over $6 billion for the Canadian economy.

CEO hopes parties commit to Global Skills Strategy

John Sicard, CEO of Kinaxis, is one of 110 CEOs who signed an open letter to the four major federal party leaders asking them to create a plan to foster Canadian innovators. (Courtesy of Kinaxis)

John Sicard is the CEO of Kinaxis, an Ottawa-based company that helps improve supply chain efficiency for clients such as Toyota, Honda and Merck and employs 700 people. Sicard said business is good, but growth is challenging because top qualified graduates are siphoned off by U.S. tech giants.

About one in four science, technology, engineering and math (STEM) students leave for the U.S. technology sector, according to a recent study from the University of Toronto’s Munk School of Global Affairs. MORE

COLIN MACKAY: Climate change will be key in elections

 


Hundreds of beach umbrellas on Outlet Beach at Sandbanks Provincial Park. Rising floodwaters have forced park staff to turn away visitors just days before the August long weekend. (FRÉDÉRIC PEPIN/RADIO-CANADA)

High water levels still remain along the shorelines of Lake Ontario and the Bay of Quinte.

Even into August, there are small sections of the waterfront trail under water. Climate change is mainly responsible for the higher water levels, although a few people will point to an International Joint Commission Plan 2014 as a culprit too. With a federal election approaching in October 2019, how politicians tackle climate change will be extremely important. At the provincial level, too many politicians consider carbon pricing as strictly detrimental, ignoring science, while spewing only opinions.

Nevertheless, scientists have been warning that a failure to act on climate change could have enormous consequences, particularly in Canada. Fortunately, William Nordhaus and Paul Romer, winners of the Nobel prize for economics in 2018, have shown that putting a price on carbon emissions is the best way for governments to combat climate change.

Already, in the Belleville area, there have been two years out of the past three that water levels have created massive flooding resulting in considerable issues, including additional costs for our municipal government. Floods in basements, rising insurance costs, and even having to move pop-up shops to higher ground are a few of these issues.

Scientists have proven the Earth is warming considerably, almost exponentially, mainly due to increasing carbon emissions. An additional three degrees of warming during this century is predicted. Scientists from Alberta have issued an even more dire report highlighting that Canada is warming twice as quickly. A six degree increase in average temperatures would be catastrophic for the north in particular. Scientists have been ringing the warning bells for a considerable amount of time, and for the most part, politicians have failed to act.

Putting a price on carbon has proven to be the best way to reduce carbon emissions. Yet, in Canada, the political will to implement this, from a provincial level, is inconsistent. Under Doug Ford, Premier of Ontario, the cap and trade program has been dismantled, removing billions in revenue. A price on carbon is viewed, by Ford, strictly as a tax with no benefits. Yet, in British Columbia, emissions have dropped considerably due to putting a price on emissions, with their provincial economy moving along just fine. Companies wanting to avoid paying a price on carbon emissions become innovative, which is one of moving forces of carbon pricing. Sadly, in Ontario, a considerable number of innovative companies weren’t given much of a chance to succeed. MORE

University of Alberta researcher creates new cling wrap from leftover canola straw

Researcher Marleny Saldaña shows the raw materials used to make canola-based cling wrap at the University of Alberta in Edmonton.
Marleny Saldaña

EDMONTON—One industry’s trash is another researcher’s treasure.

For canola oil producers, the straw is the most useless part, often left behind when harvesting canola. But Marleny Saldaña, a researcher in food and bioengineering processing at the University of Alberta, has created a new use for the leftover fibrous stalk, and that is cling wrap, more popularly known in the kitchen as Saran wrap.

“Canola is big in Canada, mainly in Alberta. We produce tons of canola,” she said. “We find that we are opening up a new use for residue that has no value until now.”

Saldaña said she noticed that the straw is mostly composed of cellulose and lignin, components that give tensile strength. She used the cellulose nanofibres found in the straw to make the see-through, plastic-like film.

Her creation could not come at a more perfect time because in March, China started banning shipment from canola companies in Canada. Saldaña believes her product could create a diverse local industry for canola in Alberta.
“We have created a new product that has high value. If we can do this in a refinery or treatment of all this canola straw (here), then we are adding more jobs, probably sending some high-value product to other countries,” she said. MORE

Canadian clean-tech companies show their stuff at CEM

Canadian innovation and breakthrough technologies present a glimmer of a green future.


Simon Beller, CFO, left, and Jos Hoetjes, chemical engineer, BC Biocarbon. Image: Nelson Bennett/Business in Vancouver

Last week’s Clean Energy Ministerial in Vancouver gave Canadian clean-tech companies a chance to show their stuff.

The event, hosted by Natural Resources Canada, is described as “a global forum where major economies and forward leaning countries work together to share best practices and promote policies and programs that encourage and facilitate the transition to a global clean energy economy.”

Here’s a look at some of the Canadian companies that presented their technologies.

TERRESTRIAL ENERGY: SMALL-SCALE NUCLEAR POWER

Based in Oakville, Ontario, Terrestrial Energy was named one of the top 10 breakthrough technologies in MIT Technology Review, curated by Bill Gates.

It is among a handful of companies developing small-scale molten salt nuclear reactors. Terrestrial’s process has cogeneration capabilities in that it can use the heat from its nuclear power plants to produce hydrogen cheaply, and combine it with carbon to produce low-carbon gasoline.

The company plans to start building its first commercial plant in Ontario in the 2020s. A second plant is planned for the U.S.

Traditional nuclear power plants can cost between $8 billion and $20 billion, but Terrestrial Energy claims it can build a 200-megawatt plant for $1 billion. Molten salt reactors do not have the same dangers of meltdowns that have plagued traditional water-cooler nuclear power plants.

Canadian and American governments have provided 25% of the company’s financing to date, with the rest coming from high-net-worth individuals.

AGORA ENERGY TECHNOLOGIES: CO2-BASED FLOW BATTERY

Spun out of the University of British Columbia, Agora Energy Technologies is a B.C. clean-tech startup that is developing a redox flow battery that uses carbon dioxide, which is then turned into a storage medium.

Flow batteries are believed to be a better storage solution than lithium-ion batteries for intermittent wind and solar power. Large amounts of electricity can be stored in liquid form for much longer periods of time using any number of catalysts – vanadium being the most common. But Agora plans to use captured CO2, which would then be converted into the storage medium, which is proprietary.

“The carbon dioxide enters the battery and the catalyst converts it to a storage medium, and that storage medium is what is used to store the energy,” said Hannah MacDonald, Agora content manager. “So carbon dioxide and electricity go in, the carbon dioxide gets converted and stored.”

MacDonald said the Agora battery system could be used to produce a carbonate product – soda ash – which is used in detergents, glass and other industrial processes. MORE

Airships to ferry goods to Northern Manitoba?

Innovation is going to result in profound changes in the new Green Economy. Airships, for example, could open up Canada’s vast northern territories, dramatically lowering the price of food, medicine, housing,  and essential supplies for development. Imagine a better future!

Airships Are Going to Redefine the Logistics Industry

Northern Manitoba chiefs are hoping an idea to help their communities avoid the high cost of fresh produce will get lift-off next month. Meagan Fiddler reports. 1:51

MKO Grand Chief David Harper said the goal is to make shipping cargo up north more cost-effective.

“There’s no reason that First Nations can’t operate these airships,” he said. “And there’s no reason they can’t build these airships.”

“Instead of sending six trucks up, you could be sending one of these, and your goods are delivered year round,” he said. Harper said climate change is making winter roads unreliable, sometimes open for just a couple of weeks. And he said a permanent road won’t be a reality for a long time.

Barry Prentice said Manitoba spends almost $5,000 per kilometer building some 2,200 kilometers of ice roads every year.

“So it’s about $10 million a year spent on ice roads,” he said. “And at the end of the year, it all melts away, and it’s gone. If we had 10 years of that money, we’d have a whole airship industry started.” MORE

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Airships Are Going to Redefine the Logistics Industry

Self-healing concrete can be used anywhere, lasts longer, is a greener option

Is this a solution for Highway 49?

Created in B.C., self-healing concrete can be used anywhere, lasts longer, is a greener option

The future is coming, and it’s arriving at Chawathil: the First Nation will be the first place in Canada to have a self-healing road.

“Chawathil is a very interesting community, very forward-thinking and modern-thinking,” said Dr. Nemy Banthia, who’s the research chair and University of British Columbia (UBC) professor behind self-healing concrete. “They welcomed us to bring this new technology into their community.

“And it’s very impactful technology,” Banthia continued. The First Nation will be getting a “highly loaded parking lot and an approach road with lots and lots of traffic.” Between the parking lot and the road, Banthia says there will be several hundred square feet of the concrete installed in Chawathil.

The possibilities for this product are nearly endless.

Created in his IC-IMPACTS (India-Canada Centre for Innovative Multidisciplinary Partnerships to Accelerate Community Transformation and Sustainability) lab, a federal research initiative based at UBC, Banthia says the self-healing road technology is a fibre-reinforced concrete that’s made through combining tire fibres, plant-based cellulose fibres, and a nano-coated manufactured fibre material: “It’s a hybrid system of (recycled and manufactured) products,” the professor explained. MORE

It’s time for nations to unite around an International Green New Deal

“The International Green New Deal changes the frame. Rather than pleading for restraint, it sets out a positive-sum vision of international investment, in which the gains from joining in outweigh those to going it alone.”

Several countries have proposed their own versions of a Green New Deal, but climate change knows no borders. We need a global response

Wind farm at sea<br>GettyImages-1133007846 Wind Farm
The stakes of the international Green New Deal are not merely environmental.’ Photograph: Craig Easton/Getty Images/Cultura RF

In times of crisis and catastrophe, children are often forced to grow up quickly. We are now witnessing this premature call to action on a planetary scale. As the adults in government accelerate their consumption of fossil fuels, children are leading the campaign against our species’ looming extinction. Our survival now depends on the prospects for a global movement to follow their lead and demand an International Green New Deal.

Several countries have proposed their own versions of a Green New Deal. Here in Europe, DiEM25 and our European Spring coalition are campaigning under the banner of a detailed Green New Deal agenda. In the UK, a new campaign is pushing similar legislation with MPs such as Caroline Lucas and Clive Lewis. And in the US, dogged activists in the Sunrise Movement are working with representatives such as Alexandria Ocasio-Cortez to push their proposal to the front of the political agenda.

Unfortunately, climate change knows no borders. The US may be the second-largest polluter in the world, but it makes up less than 15% of global greenhouse emissions. Leading by example is simply not enough.

Instead, we need an International Green New Deal: a pragmatic plan to raise $8tn – 5% of global GDP – each year, coordinate its investment in the transition to renewable energy and commit to providing climate protections on the basis of countries’ needs, rather than their means.

Call it the Organization for Emergency Environmental Cooperation – the namesake of the original OEEC 75 years ago. While many US activists find inspiration in a “second world war-style mobilization”, the International Green New Deal is better modeled by the Marshall plan that followed it. With financial assistance from the US government, 16 countries formed the Organization for European Economic Cooperation (OEEC), dedicated to rebuilding the infrastructure of a devastated continent and coordinating its supply of energy.

But if the original OEEC entrenched an extractive capitalism at Europe’s core –protecting the steel and coal cartel – the new organization for an International Green New Deal can empower communities around the world in a single transformational project.

Confronting the climate crisis will require more than keeping fossil fuels in the ground.

The transnational scope of this mobilization is crucial for three main reasons. MORE

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Economist Mariana Mazzucato explains how rethinking industrial policy could be key to tackling climate change.

Maple Leaf pivots to plant-based proteins with new U.S. factory

Indiana plant will double its production of pea and grain-based protein alternatives


Maple Leaf is investing heavily in plant-based products, including tempeh, franks and other meat alternatives.(Greenleaf)

MIssissauga, Ont-based Maple Leaf Foods is investing in meat alternatives, building the largest plant in North America for plant-based protein.

The $310-million US plant in Shelbyville, Indiana, about 50 km from Indianapolis, will more than double Maple Leaf’s capacity to produce plant-based protein products for the Canadian and U.S. markets.

Construction is expected to start in late spring this year, with production start-up expected in the fourth quarter of 2020.

Demand for meat alternatives growing

The company, once known mainly for its processed meats, estimates sales of plant-based protein in North America topped $1 billion in 2018. In a conference call with investors, CEO Michael McCain said he expects double-digit growth in the segment for the foreseeable future.

“North American consumers are seeking more protein and more protein choices in their diet,” he said. “Plant-based protein is on the cusp of becoming mainstream with incredible growth potential.” MORE