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Le Grand Paris. How would this project generate an economic growth?

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par Nicolas Saouaf
Reims management school - Master 2011
  

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D-c Environmental projects

Le Grand Paris project is often linked to a simple transport project, nevertheless this idea is false. Indeed, even if the government does not already taken official decisions for Paris Ile-de-France in order to reduce the ecological impact.

Indeed, the government wants to create a Paris Ile-de-France eco-friendly. According to Jean-Robert Mazaud, a sustainable city is an urban area able to recycle its wastes in order to aliment its agricultural productions, and also creates some energy. A sustainable city is also able to reabsorb its CO2 emissions, and use all its spatial territory with efficiency129.

126 Saurav Dev Bhatta, Matthew P. Drennan, «The Economic Benefits of Public investment in Transportation», P.P.293

127 Haughwout, «Regional fiscal cooperation in metropolitan areas: an explanation», journal of policy Analysis and management 18, 1999, P.P. 579-600

128 Nadiri, Manumeas, «The effects of public infrastructure and R&D capital on the cost structure and performance of U.S. manufacturing industries»,The review of Economics and Statistics n°76, 1994, P.P22-37.

129 Michèle Leloup, Marion Bertone, « Le Grand Paris, les coulisses de la consultation », 2009, P.P 57

One «simple» project has been presented by MVRDV, which consists to create a new forest of 1 million trees dispatched on 2500 hectares in Roissy. This would impact the noise generated by the airport and will reduce the CO2 impact of the planes130. The agency also proposed to cover the ring of Paris, to create an urban park, which would reduce the disparity between Paris and the suburbs.

The agency also thought to develop solar panels on the buildings' roofs of Paris, or use the Seine natural flow to produce electricity. Another idea from MVRDV to produce sustainable energy for Paris would also be to place some windmills around the territory borders131. If these ideas are applied, the region could stand-alone in order to produce all the energy needed for the good functioning of the territory.

LIN agency promoted the urban agriculture as part of its program for Le Grand Paris. According to Joseph Hanimann, the goal of this proposition is not to create an economic growth, but more to have a primordial symbol, and establish a spirit in the city132.

By investing in different projects, the government should create a city more eco-friendly with a new economic opportunities. Indeed behind this project to ensure a Green city, we can imagine the new regional positioning as explained by porter133 that the government wants to provide to the region.

Indeed, Green investments bring economic growth with an innovative way. Development of new business (creation of new jobs), reduction of CO2 and improvement of the quality of life should be the results expected by these new policies.

Hypothesis 3: The Greater Paris project is not a generator for the green economy

As we have previously seen, the French government wants to create a Green impact through Grand Paris project. Indeed, the creation of a sustainable economy should be the final result expected by the Greater Paris. But we are now trying to demonstrate that the actual decisions taken by the La Société du Grand Paris are not sufficient, and not in the good direction to reach this objective.

Mathew Forstater has summarized the conditions needed to establish a sustainable economy. Indeed,
five points have been made in order to be able to respond to the ecological challenges, and to

130 MVRDV, Le Grand Pari(s), Consultation internationale sur l'avenir de la métropole Parisienne, P.P 125

131 Michèle Leloup, Marion Bertone, « Le Grand Paris, les coulisses de la consultation », 2009, P.P 177-178

132 Michèle Leloup, Marion Bertone, « Le Grand Paris, les coulisses de la consultation », 2009, P.P 160

133 Porter M. E. et Stern S. « Innovation: Location Matters», MIT Sloan Management Review n° 4, 2001, P.P. 28 to 37

understand better the relation between the economy and the environment. In this research Mathew Forstater uses the term «biophysical conditions» which are necessary for a sustainable economy134.

1- The composition of waste (from production) must be able to be reused into a harmless (or beneficial) product, unless the recycling process needs more resources than it saves. This is represented by W = A where W is a vector of quantity distinguished wastes and A is a vector of distinguished assimilative capacities.

2- The utilization rate of renewable resources has to be equal or less than the level of renewal, and for the level of stock renewable, it should be between the minimum and maximum level. These two factors (strock level and rate of utilization) should correspond to the maximum sustainable yield. The author defined the source function of the ecosphere for stock renewable resources as «Usr = Ysr: where U is the rate of utilization or harvest, Y is the yield or rate of renewal and sr denotes stock renewable resources»135.

3- The third condition referred by the author is the importance that companies have to replace there exhaustible resources by renewable sources. Indeed, any use will decrease the total amount of these resources availability (exhaustible resources will reach the zero level at some point). The author defined it by Usr + Unr = Ysr, where nr represents the nonrenewable natural resources (sr still represents stock of renewable resources). This shows that the rate of utilization of renewable and nonrenewable resources must be equal or inferior to the yield of renewable. The decline of exhaustible resources will be compensated by the coordinated increase of renewable resources. It is also really important to precisely define the productivity and the efficiency of all resources.

4- In order to obtain an higher productivity and efficiency of all resources, it is important to maintain a high level of technological innovation. Indeed in order to achieve the point 3, it is necessary to increase the productivity and efficiency of exhaustible. The technological improvements should permit to «increase regeneration rates, improved resource extraction techniques, improved pollution abatement, increased assimilative capacities, and cultivation of renewable resources stocks. And again, maximum recycling is a must (also reuse, reduce, and repair)»136.

134 Mathew Forstater, «Public employment and environmental sustainability», Journal of Post Keynesian Economics, Vol. 25, N°3, 2003, P.P. 387

135 Mathew Forstater, «Public employment and environmental sustainability», Journal of Post Keynesian Economics, Vol. 25, N°3, 2003, P.P. 388

136 Ibid, 2003, P.P 388.

5- The last point to achieve a sustainable activity must be that the level and composition of the production should not have thermal effects, and should preserve the biodiversity.

We can see a contradiction here, between the Greater Paris structure and its objectives. We assume that the Greater Paris is a Keynesian application model and one of its objectives is to create a green cluster to have a sustainable city and improve the economic situation. Nevertheless still according to Mathew Forstater, «traditional approaches to both unemployment and environmental degradation are insufficient to achieve either full employment or ecological sustainability»137.

Indeed, even if Keynesian demand management could achieve full employment, the company competition is still based on price efficiency. Regarding this competition, we can assume that the Keynesian (or liberal) model can be environmentally destructive, as there are too many barriers for companies to reach the demand generated with a Keynesian stimulus138.

After the reading of this article, we can realize the limits of our economic systems regarding the world sustainability. Indeed, how a government can generate a green environment, when there are too many barriers to adopt a green economic system?

Laura Albareda et al. have worked on the role of European governments on the Corporate Social responsibility, with a focus on environmental issues. Indeed the research aimed to focus on the interrelation, collaboration and partnership between governments, businesses and civil society stake holders139.

The authors have illustrated the relationships between these three economic actors, due to a map. This map shows that governments interfere in CSR policies by showing the good examples. These governments' examples have to show the positive impact of these policies on businesses to encourage companies to adopt them. It aims also to give awareness to the civil society (stake holders) about the benefits of these politics. The overall benefits of the CSR policies on these three actors will improve the collaboration between governments, businesses and civil society140.

137 Ibid, 2003, P.P 390

138 Mathew Forstater, «Public employment and environmental sustainability», Journal of Post Keynesian Economics, Vol. 25, N°3, 2003, P.P. 391

139 Laura Albareda, Josep M. Lozano, Tamyko Ysa, «The Role of governments in Europe», Journal of Business Ethics, Vol. 74, No. 4, (Sep., 2007), pp. 395.

140 Ibid, 2007, P.P.395

141Figure 14: Relational model for CSR public policy analysis

The authors have analyzed different European governmental action to have an influence on CSR. Indeed, the authors have analyzed four different models to explain actions which are driven by governments in order to improve the CSR situation142:

-Partnership model: Governments shares investment with actors to face the socio-employment problems. This strategy has been observed in Denmark, Finland, the Netherlands and Sweden.

-Business in the community: The government applies soft intervention policies to encourage the businesses to develop a green environment. This system has been observed in Ireland and the United .Kingdom.

- Sustainability and citizenship: This system implies the upgrade by the governments of the version of existing social agreement by focusing on sustainable development. Authors have located this approach in France Germany, Austrian Belgium and Luxembourg.

141 Laura Albareda, Josep M. Lozano, Tamyko Ysa, «Public Policies on Corporate Social Responsibility : The Role of governments in Europe», Journal of Business Ethics, Vol. 74, No. 4, (Sep., 2007), pp. 395.

142 Ibid, 2007, P.P. 401

-Agora: Creation of groups to discuss on the different social actors to create a public consensus on CSR. This is mainly applies in Italy, Spain and Portugal.

Even with the critics of Mathew Forstater regarding the impossible application of a Green environment because of the Keynesian system, we can still analyze what would be the impact of the Government through the Greater Paris to install and improve the Green Business.

Indeed as mentioned in the article «The role of governments in Europe», the French government uses a sustainability and citizenship model. The authors attribute a special focus to France «Among the countries included under this model, France deserves special attention. In France, CSR is well-established in government-supported activities focusing on sustainable development So much so that, at times, such activities appear to be directed by the govern ment, revealing a more regulatory approach, in line with the apparently more centralist orientation of the French state.143».

These points of view of the authors confirm the general approach of the French government to increase the green businesses: By investing in a project (Greater Paris), the government invest and forecast on a development of the Green Business by showing its interests and benefits (public debate of the Greater Paris).

Nevertheless, except the creation of a forest of one million trees, there are not others projects decided yet. Is this strategy to open a debate, and insisting on «Green communication» will be enough to develop a real Green Business in Paris Ile-de-France? The real question is to know if the Greater can create a R&D centre important enough to support a Green development, but also an IT development.

To conclude the hypothesis 3: Yes, we cannot see a real green cluster creation through the project of the Greater Paris. Indeed, as mention by the author Mathew Forstater, the economic model does not permit a real Green cluster enforcement of Paris Ile-de-France. In previous part we mentioned the fact that Paris is the most important city concerning green R&D. But these infrastructures were existing before the creation of the Greater Paris idea. Also as we said, Paris has the will to become the worldwide reference in term of sustainability, but unfortunately it has not been really considered so far as primordial in the Greater Paris construction. We could not see direct law to enhance a Green cluster, and the actual good positioning of Parisian research centers in this area do not result of the Grand Paris decisions, but rather from the general expansion of the «green» trend.

143 Laura Albareda, Josep M. Lozano, Tamyko Ysa, «Public Policies on Corporate Social Responsibility : The Role of governments in Europe», Journal of Business Ethics, Vol. 74, No. 4, (Sep., 2007), pp. 403

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