Quantifying economic and environmental benefits of co-located firms

Resource sharing among co-located firms--referenced in the industrial ecology literature as "industrial symbiosis"--engages traditionally separate industries in a collective approach to business and environmental management involving the physical exchanges of materials, energy, water, and byproducts. While industrial symbiosis is seen hypothetically as a win-win situation, there are few analyses of the economic and environmental consequences for the individual participants in multi-faceted exchanges. In this article, the nascent industrial symbiosis network in Guayama, Puerto Rico, is explored from environmental, economic, and regulatory perspectives of the individual participants and the community. A coal-fired power plant, owned and operated by the AES Corporation, draws five million gallons per day of process water from nearby sources thus avoiding freshwater withdrawals and, through steam sales, significantly reduces emissions from a nearby refinery. This article quantifies economic and environmental costs and benefits for the symbiosis participants, concluding that there are substantial benefits to engaging in symbiosis, although these benefits fall unevenly on participating organizations. Policy intervention can be a viable means of motivating more regular occurrences of resource exchanges among groups of firms.