I was at the ICMA Annual Conference earlier this week as part of ICMA’s Center for Sustainable Communities team. I’m helping ICMA address economic sustainability as part of their comprehensive sustainability efforts. There are many topics that fall under the economic sustainability framework, but incentives is not one that might leap immediately to mind.
However, there is already a great deal of overlap between the way communities use incentives and the three E’s – economy, environment and equity – associated with sustainability.
We most closely associate state and local incentives with traditional economic development and growth strategies. But numerous incentive programs also support environmental and equity goals.
For example, in the environment category many states offer incentives for renewable energy projects and brownfields redevelopment, while some states also incentivize green tech or clean tech businesses and LEED certification.
Almost every state and many localities also use incentives to address equity issues in their communities by offering special tax breaks or other financial inducements to invest in distressed neighborhoods, hire specific categories of unemployed or underemployed workers, or provide workforce training to raise individual skill levels to lead to better job opportunities.
We have spent substantial amounts of time thinking about how to evaluate incentives by return on investment (ROI). It is not a tremendous step also to think about evaluating incentives according to some of the triple bottom line criteria, especially since some of those criteria are clearly inherent in the incentive policies themselves.
As we at Smart Incentives deepen our work on economic sustainability, look for more to come on how these two leading issues in economic development complement each other.