Industrial ecology and the rediscovery of inter-firm recycling linkages: historical evidence and policy implications

'Industrial ecology' is one of the most influential perspectives to have emerged in recent years in the wider discourse on 'sustainable development'. The vast majority of industrial ecologists believe that past economic development was characterized by a linear system of extraction, use and disposal. One of their main goals is therefore to find ways to make modern industrial economies mimic ecosystems by transforming the waste of one firm into the valuable input of another. Historical evidence presented in this article, however, demonstrates that inter-firm recycling linkages were a dominant characteristic of past economic development. If this was the case, why do most writers on sustainability believe otherwise? I suggest two broad categories of explanation: a lack of research into the spontaneous formation of inter-firm recycling linkages; and the progressive and cumulative implementation of market distortions and regulatory barriers to resource recovery over the last century. One implication of these findings is that the most important task facing industrial ecologists is probably not the technical challenge of planning resource recovery between firms, but the development of an institutional framework that forces firms to 'internalize their externalities' while leaving them the necessary freedom to develop new and profitable uses for by-products.