Developing a Regional Circular Value Ecosystem

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Developing a Regional Circular Value Ecosystem Technical Report · August 2015 DOI: 10.13140/RG.2.2.34939.92962

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DEVELOPING A REGIONAL CIRCULAR VALUE ECOSYSTEM BASED ON RESIDUES AND WASTES

THE CASE OF HIGUERAS VILLAGE, MEXICO





EDUARDO AGUIÑAGA CIRCULAR ECONOMY INNOVATION PROJECT SCHMIDT-MACARTHUR FELLOWSHIP 2015-2016

AUGUST 2016

D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

Mentor

Dr. Carlos Scheel Director, Research Chair: Wealth creation by Innovation and Technology Professor Emeritus EGADE Business School, Tecnologico de Monterrey, México [email protected] Special Thanks to

The Ellen MacArthur Foundation for the funding of the Schmidt MacArthur Fellowship. The support provided by the Ecological Association of Sierra Picachos A.C. (AESPAC) as well as all local entrepreneurs from Higueras who made this project possible.



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

TABLE OF CONTENTS Foreword ............................................................................................................................................................................. 4 List of acronyms .................................................................................................................................................................. 5 Chapter 1: Introduction ...................................................................................................................................................... 6 Statement of the problem ............................................................................................................................................. 6 Purpose of the CEIP ....................................................................................................................................................... 7 Research questions ........................................................................................................................................................ 8 Proposition ..................................................................................................................................................................... 8 Structure of the CEIP report .......................................................................................................................................... 8 Chapter 2: Literature Review ............................................................................................................................................. 9 Definition of Terms ........................................................................................................................................................ 9 Chapter 3: Conceptual Framework ................................................................................................................................. 13 SWIT’s Roadmap to Circularization ............................................................................................................................ 14 Chapter 4: Methodology ................................................................................................................................................. 22 Chapter 5: Case Study Higueras Village, Nuevo Leon, Mexico ....................................................................................... 23 Higueras’ Challenge .................................................................................................................................................... 24 Chapter 5: Systems Dynamic Modeling .......................................................................................................................... 26 Model Construction .................................................................................................................................................... 26 th

The Regional Circular Value Ecosystem of Higueras: A 10 Anniversary Scenario ................................................... 34 Chapter 6: Discussion ...................................................................................................................................................... 35 Chapter 7: Conclusions .................................................................................................................................................... 36 References ....................................................................................................................................................................... 37 Appendix I ........................................................................................................................................................................ 42

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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

FOREWORD The present Circular Economy Innovation Project (CEIP) was undertaken as part of a PhD in Business Administration ongoing research at the EGADE Business School of Tecnologico de Monterrey, Mexico. The CEIP focuses mainly in designing an alternative wealth creating system in order to provide an alternative to the rooted linear approach of businesses, entrepreneurs, inhabitants and governments of developing countries. More specifically, the CEIP provides a roadmap that enable the circularization of multiple linear value chains and stakeholders within a region. Furthermore, it examines and applies the capabilities of methodologies such as systems dynamic modeling in order to design, model and simulate a Latin American community in process of achieving self-sustainability through the circularization of its linear value chains.

To do so, both an extensive literature review based mainly on scientific journals and literature as

well as several visits to the community were conducted. Asociación Ecológica de Sierra Picachos A.C. (AESPAC) helped with the arrangement of the multiple semi-structured interviews to the local people and entrepreneurs as well as managed the multiple visits to the most salient economic poles at the village.

The present report summarizes the result of an ongoing research which has been presented and

discussed at different national and international conferences, therefore, strengthening its validity. Although the research is not finished, several conclusions have been drawn.









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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

LIST OF ACRONYMS

Asociación Ecológica de Sierra Picachos A.C.

(AESPAC)

Blue Economy









(BE)

Business Processing Units





(BPU)

Circular Economy





(CE)

Circular Economy Innovation Project



(CEIP)

Cradle to Cradle







(C2C)

End-of-life









(EoL)

Industrial Ecology







(IE)

Industrial symbiosis







(IS)

Linked Producer-Product Matrix





(LPPM)

Residues and Wastes







(R/W)

Systems Dynamics







(SD)

Zero Emission Research Initiative



(ZERI)

Zero-Residue Industrial Ecology System



(ZRIES)





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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

CHAPTER 1: INTRODUCTION STATEMENT OF THE PROBLEM The recent escalating production of wastes, pollution of water, eroded soils as well as the CO2 emissions derived by the excess of consumption and by the intense industrialization are clear signs of an urgent need to create new way of prosperity. This non-sustainable growth has caused the earth to be unfeasible to recover most its resources through natural means. A considerable contributor of this problem is solid waste. Governments and local authorities in developing countries are incapable to deal with the increasing production solid waste through regulations given their weak rule of law. Therefore, there is an escalating need to cope with this problem through an effective, innovative, and sustainable mechanism (Yay, 2015). This situation requires a new economic paradigm based on the principle of loop-closing where all residues and wastes (R/W) can be further utilized for creating high sustainable value (economic, social and environmental). We must transform R/W from urban consumption and linear product cycles into environmentally reversible and recoverable products, economically viable and competitive, as well as socially equitable and responsible through sustainable cycles (Donald, 1999; Scheel, 2014). Solid waste management has been addressed from optimization perspectives over one linear production chain as well as industrial ecosystems capable of reducing the consumption of virgin materials and creating symbiotic linkages of R/W sharing (see Chertow, 2000). Recently, there is an increasing need to innovative, and create value adding technologies for the achievement of a zero emission goals where no residue is left unexploited or valorized. Therefore, we must change from end-of the pipe approaches to waste, to a more systemic and value generating one (Dong et al., 2014). Zero emission’s goal requires radical breakthroughs to shift from individual technologies to a system’s level (Schnitzer & Ulgiati, 2007). The switch from one company or process in complete isolation, towards a more systemic, regional and interconnected level requires more attention towards integrating the diversity of stakeholders and their potential synergies. Additionally, the dynamics of these systems must be addressed, in order to unearth its behavior which is needed when multiple actors and their processes are involved. Consequently, numerous researchers have integrated systems thinking and system dynamics (SD) modeling tools into their research agendas. Literature on industrial ecology has integrated SD modeling into their methodologies (e.g. Bollinger et al. 2012, Verhoef, Dijkema & Reuter, 2004) acknowledging the importance of dynamic simulation on the cyclic usage of materials. Research over sustainable systemic activities within a region that take into account not only efficiency on financial grounds, but focus also in the increase of social and environmental wealth are also present in the literature. Ometto et al. (2007) research focused on an agro-industrial network, concluding that the integration of multiple



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS industrial activities through symbiosis i.e. waste sharing and reprocessing, represents the main factor for succeeding at the ecological, sociological and economical arenas. It is clear that recent research suggested broadening both the unit of analysis and the time scope. There is an increasing focus over analyzing regions from a systemic perspective above isolated processes and products, and dynamics of systems on longer time spans. Therefore, a new approach is needed to cope with this new reality where all the regional economic operations are circularized in order to create what has been termed a regional Circular Value Ecosystem (CVES) (Scheel, 2016). The CVES are regions composed of a network of new start-ups and already established economic activities linked through non-usual business opportunities for residues and wastes valorization. Using concepts such as cascading business models and multiple cash flows from blue economy (Pauli, 2010), waste and residue sharing from industrial ecology (Frosch and Gallopoulos, 1989), circularity principles from circular economy (Ellen MacArthur Foundation, 2012), as well as systems dynamic modeling (Richmond & Peterson, 1997; Sterman, 2000), a mechanism called Zero Residues Industrial Ecology System (ZRIES) has been developed (Scheel, 2016). Through ZRIES mechanism, each economic activity and residue generator in the region is capable of achieving an effective and efficient clean production, waste revalorization that creates not only economic rents, but also social inclusiveness while increasing the natural resilience. Therefore, ZRIES enables the circularization and interweaving of all activities within a region, allowing it to become self-sustainable.

PURPOSE OF THE CEIP The present CEIP presents an innovative regional approach to deal with residues and wastes. It describes an industrial ecology (IE) systems model based on the SWIT Model (Sustainable Wealth creation based on Innovation and Technology) (Scheel, 2016) designed to create regional Circular Value Ecosystems (CVES) where all the inputs of the community are transformed and remain within it through the conversion of R/W produced by the community into higher nutrients for other transformation processes within the region. This means “interlinking” economic models, policies and strategies, for inserting and converting R/W chains into multiple increasing returns cycles. The SWIT model creates high value generating systems with an impact on the three axes of sustainable development namely economic, social and environmental. The SWIT reverts the equation, to convert community sustainable practices and restrictions into real economically competitive and socially beneficial products. The main objective of the present CEIP is to circularize linear value chains in order to create Circular Value Ecosystems (CVES) following the Circular Economy framework. This, in order to assess the true impact and sustainable (systemic) viability of non-usual business models based on residues and wastes.





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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS Residues and wastes represent potential sustainable wealth creators for regions when proper technologies, innovative business models as well as a lot of creativity are applied to the regions’ main core activities. This new systemic approach takes into account the potential synergistic interactions among different stakeholders in a region. A case study of the village of Higueras, Mexico was selected in order to support this new approach. The case includes the system dynamic modeling of three main economic activities within the region responsible for the production or transformation of products, R/W. Using Vensim® software package, the community was modeled and simulated. Simulation results supports the technical viability and the conformation of a regional circular value ecosystem (selfsustainable community) where the waste and residues are efficiently transformed for creating economic, social and environmental wealth.

RESEARCH QUESTIONS Therefore, the main guiding research questions entail the following:

a) How current linear value chains can be redesigned into a close-loop regional circular value system? b) How to measure the ongoing sustainable value-creation (after the main product is produced) derived from residues’ valorization produced from the circularization of linear value chains?

PROPOSITION By answering the research questions guiding this study, this CEIP intend to support the following proposition: Proposition: Current (wasteful) linear value chains can be redesigned into a more closed-loop value system (CVES) whereby all the residues produced along the production line, can be transformed into valuable products (valorized) or become feedstock for other processes within a region.

STRUCTURE OF THE CEIP REPORT The present CEIP report is structured as follows. First, a review of extant literature regarding the most significant concepts used is provided. Afterwards, the conceptual model is developed and explained with real case studies. Moreover, the methodology used in the present CEIP is discussed. Furthermore, the case of Higueras Village is presented along with its main challenges. Then, the system dynamic model construction is presented in order to exemplify the construction of what it is called a regional Circular Value Ecosystem. Also, based on the system dynamic simulation, a scenario description of the village ten years from now is explained. Additionally, a brief discussion concerning the impact of waste and residue valorization and sharing among the stakeholders of Higueras is provided. Finally, the conclusions are presented regarding the construction of a self-sustainable community.





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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

CHAPTER 2: LITERATURE REVIEW DEFINITION OF TERMS SUSTAINABLE COMMUNITIES Creating sustainable communities represents a complex task. Most of the times it is difficult to implement since, in order to protect the community local environment, green economy tends to regulate activities through subsidies, regulations, fines etc. If all regulations are applied to a community, it is very unlikely that it would endure. So the idea behind this approach is the transformation of a community that has the potential to be sustainable fully self-manageable through both management and governance and as a result economically rich, into a sustainable society. In order to do so, first a systems model of industrial ecology based on urban communities must be developed. The generation of a zero-waste community (all the inputs and wastes of a community remain in the community) can be performed through the transformation of waste produced by the community into “nutrients” for high value creating processes (economic, social and environmental) within the region. It is essential to generate substantial economic inputs for the community; otherwise these communities will not subsist in the long term, mainly in developing countries. These actions aim into reversing the equation to convert sustainability legislations into economically viable and socially inclusive assets for the community. Therefore, there is an increasing need to switch from a subsidy-driven green economy-based sustainable community towards a zero-waste community. On the one hand a sustainable community is defined as that who meet a community’s economic and social needs while not compromising the natural environment (Nozick, 1999; Roseland, 1998) through the efficient use of urban space, minimizing consumption of natural capital and multiplying social capital (the shared knowledge and patterns of interaction of a group of people) while simultaneously engaging citizens and their governments in decision-making processes (Hallsmith, 2003; James & Lahti, 2004; Roseland, 1998). In other words, a sustainable community is continually adjusting to meet the social and economic needs of its residents while preserving the ability of the environment to support it (Roseland, 2000). In order to create and operate these self-regulating systems (sustainable communities), a new economy must serve as a guiding theoretical perspective.

CIRCULAR ECONOMY Linear ‘take-make-dispose’ approach is leading to scarcity, volatility, and pricing levels that are unaffordable for our economy’s manufacturing base. (Ellen MacArthur Foundation, 2012). The current wasteful system is rooted in a linear ‘take-make-dispose’ approach encouraged by low resources prices relative to labor costs. This translates into a vicious cycle of cheaply obtaining new input material (virgin) and



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS cheaply disposing the residues into the environment. This is supported by two critical tendencies. First, the increasing use of more resources (e.g. energy) to reduce labor costs, and secondly by the fiscal and accounting regimes and rules that allow indirect costs in for of externalities to remain unaccounted (Ellen MacArthur Foundation, 2012). Circular Economy (CE) replaces the linear “end-of-the-life” concept with a “close-loop” usage of resources. It represents an industrial system that is restorative or regenerative by intention and design. It focuses on eliminating all waste through careful, innovative and clean design of materials, products, systems and business models (Ellen MacArthur Foundation, 2012). CE is a study of the whole economy, i.e. the monetary, energetic and resource material systems (Webster, 2015). Rooted in environmental economics, which aims at achieving an integrated sustainability science (Andersen, 2007), CE is one of the two major themes of sustainable development (Li, 2012). The concept of circular economy has theoretical roots on industrial ecology (Andersen, 2007). CE concept originates from the industrial ecology paradigm (see Chertow, 2000; Frosch, 1992; Frosch and Gallopoulos, 1989) but by building on the notion of loop-closing (Yuan et al., 2006). There are three principles that guide CE. These are (a) designing out waste referring to eliminating wastes (zero-waste approach); (b) circularity of biological and technical nutrients (McDonough & Braungart, 2002) which takes into account the origin of the resource and the possibility of returning it to the biosphere whereby biological ones are returned to earth whereas technical ones are cycled through the economy in form of leased products replacing the notion of consumer with that of a user; and (c) energy requirements aiming at reducing the dependence over non-renewable sources.

These three principles create four sources of value creation which are (a) to minimize material usage, (b) longer

cycling of materials i.e. longer usage and less virgin material (c) cascading or diversified reuse of material streams and (d) pure uncontaminated materials of high quality (Ellen MacArthur Foundation, 2012). By turning linear industrial economy into circular, close-loop economy, we are reducing the importance for resource extraction and waste management (Webster, 2015).

INDUSTRIAL ECOLOGY The traditional biological ecology is defined as the scientific study of the interactions that determine the distribution and abundance of organisms (Jelinski, Graedel, Laudise, McCall & Patel, 1992). In a biological ecosystem, organisms use several inputs such as water, sunlight and minerals to grow, while others feed on them and produce their own waste. These wastes are used as food for other organisms and so on, until a complex network of processes in which everything produced is used by some organism for its own metabolism is created. In the same way the attempt of industrial ecosystems is to operate through analogy that although not perfect, could mimic the best features of the biological analogue (Jelinski, et al., 1992). Frosch and Gallopoulos (1989) coined the term “Industrial ecosystem” which later became more known as industrial ecology. According to Frosch (1992, p.800)



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS “The idea of an industrial ecology is based upon a straightforward analogy with natural ecological systems. In nature an ecological system operates through a web of connections in which organisms live and consume each other and each other's waste.” Industrial ecology is an integrated system in which the consumption of energy and materials is optimized and the effluents of one process serve as the raw material(s) or energy for another process (Frosch & Gallopoulos, 1989). IE represents a framework that serves industrial systems for emulating the design and operation of living systems, which are interdependent with natural systems (Julien-Saint-Amand & Le Moënner, 2009), which is the foundation of biomimicry (Beynus, 1997). IE is a multidisciplinary area as it is based on a holistic, systems view, relying heavily on engineered, technological solutions to environmental problems (Keoleian & Garner, 1994). IE is also known as the science of sustainability due to its interdisciplinary nature and the possibility for its application on the service sector (Webster, 2015). It is a systems-based discipline seeking to understand emergent behavior of complex integrated human/natural systems (Allenby, 2006) by taking into account that each process and network of processes must be viewed as a dependent and interrelated part of a large whole (Frosch, 1992). The main goal of IE is to move from a linear (open) system, to a cyclical (closed) loops system (Keoleian & Garner, 1994). Since the recognition of the advantages of industrial ecology through symbiosis, there has been an increasing trend towards its formation due to the benefits on social, economic and environment grounds. According to Desrochers (2000), while the first and most successful case of industrial symbiosis in Kalundborg, Denmark was developed entirely through market forces, many policy analysts argue that public planners can copy and even improve upon it. Albeit developing an IS is not easy. Bass (2008) argues that in spite of the successes of several symbiotic regions, creating one presents a real endeavor. On the one hand perception, ignorance and the fear of making changes presents a slowdown to the process. On the other hand, there is an excessive emphasis upon technological and mechanical dimensions rather than focusing on non-technical dimensions (Bass, 2008).

P RINCIPLES OF I NDUSTRIAL E COSYSTEMS In order for an industrial cluster of proximate firms to become an industrial ecosystem, it must follow four basic principles (Korhonen, 2001). The first is roundput, and it means the residues should flow in cascade-like fashion in order for the symbiotic firms around are able to use the wastes as feedstock. The second principle is diversity, which refers to the need of having firms of different industries as this generates wastes with distinct compositions that can be exchanged. The third is locality and is associated to the cooperation between firms that are within the region. And finally the fourth principle is called gradual change, which refers to the process of adaptation required by the firms regarding the quantities and times in which the generated waste can be effectively used.

INDUSTRIAL SYMBIOSIS

Industrial symbiosis (IS) is one of the main branches of IE (Chertow, 2000). Symbiosis refers to the co-existence 11

D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS among diverse organisms in which each may benefit from the other (Julien-Saint-Amand & Le Moënner, 2009). Within IE literature, symbiosis term refers to the industrial cooperation among companies and municipalities whereby both exploit each other’s residues or byproducts or when they operate jointly (Julien-Saint-Amand & Le Moënner, 2009). IS focuses on the flow of resources through clusters of geographically proximate businesses and is defined as the collaboration among different industries for mutual economic and environmental benefit (Chertow, 2007). According to Chertow (2007), in order for a network relationship of waste streams to be considered as a symbiosis, it must at least be composed of three different entities exchanging at least two different resources. This will be classified as a 3-2 symbiosis.

BLUE ECONOMY

The Blue Economy (BE) represents an open-source movement (Ellen MacArthur Foundation, 2012).

Considered one of the perspectives that promotes the migration towards a more circular economy, BE argues that through the usage of resources available in cascading systems, the waste of one product could become the input for other processes, therefore creating a multiple cash flows of wealth.

Inspired by perspectives such as Biomimicry (Benyus, 1997), systems thinking (Senge, 2006; Sterman, 2000)

and innovative business models, Blue Economy’s main great contribution is the concept of cascading multiple cash flows. Concept which revolves around the idea of creating a new innovative business model based on residues and wastes but valorizing them through a cascade-like fashion.



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

CHAPTER 3: CONCEPTUAL FRAMEWORK The conceptual framework is based mainly on the SWIT (Sustainable Wealth creation based on Innovation and enabling Technologies) framework (Scheel, 2016). This framework has incorporated the previously defined concepts (i.e. industrial ecology, circular economy, blue economy etc.) in order to create sustainable wealth with a holistic vision by operating at three levels. The first level corresponds to the linear value chains. Here, the SWIT endeavors on transforming the linear value chains into close-loop chains in what it is called the zero-value residue industrial ecology system (ZRIES). Moreover, the second level is at a regional scale. Through the regional circular value eco-system (CVES) the SWIT provides the guidelines on the articulation of the potential synergies among multiple ZRIES businesses in a region with the purpose of creating a self-sustainable, near zero-waste community. Finally, the third level is the the sustainable regional sharing value system (SVS) where a sustainable system of capitals with high impact on the social, environmental and economic activities of a region could be attained if all the necessary conditions such as resources, technologies, policies, infrastructure along with an inclusive governance and a resource allocation management are provided. By using the SWIT framework and principles, it was possible to conform a roadmap for circularizing a region which is divided into the following phases: 1.

Mapping the extended value system (EVS) chain.

2.

Synergy (inventory) of effluents.

3.

Residues based regional synergies.

4.

Identification of sustainable value opportunities.

5.

Processes and technologies identification.

6.

Linked producer-product matrix (LPPM).

7.

Systems dynamic modeling.

8.

Start-ups’ clusterization strategies.

9.

Systemic assembly of regional business models aiming at developing a well articulated mechanism, replicable and effective, for the generation of an innovation cluster for multiple start-ups and business models, based residues and wastes. The following section describes each of the phases and provides examples from the literature as well as

theoretical support.



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

SWIT’S ROADMAP TO CIRCULARIZATION Mapping the extended value system (EVS). The value chain is the basic tool for examining all the activities a

firm performs and how they interact (Porter, 1985). It represents the description of the full range of activities required to bring a product or service from conception, through the different phases of production, delivery to final consumers, and final disposal after use (Kaplinsky & Morris, 2003). However, the common value chain may fall short for depicting real world value chains which are more complex. Therefore, an EVS is a more detailed and elaborate depiction of the value chain (Scheel, 2016) which entails the description of the following issues: the raw materials and supplies, transformation machinery and support activities, value activities, industries and related services, local and external players as well as the best practices in sustainability criteria. The EVS is constructed focusing on the dominant or linear product. Figure 1 depicts an example of a simplified map and portion of the dairy and confectionery EVS of Monterrey’s (Mexico) food industry.

The deployment of the value chain focuses on the product life-cycle management, around which a number

of entry activities in support activities (both above) and identifiers of competence and best practices in the bottom three activities are carried out to the main value chain. Each of the processes, intermediate products and final products must be categorized according to certain standards. These standardizes codes provide international comparability (UN, 2013). The codes used in the EVS are the following: ü

International Standard Industrial Classification of All Economic Activities (United Nations’ system for classifying economic data) (ISIC)





ü

Industry Classification System of North America and Mexico (NAIC)

ü

Standard International Trade Classification (SITCS)

ü

Harmonized Commodity Description and Coding System (HS)

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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS Extended Value System Chain for the Food Industry in the Metropolitan Area of Monterrey, Nuevo León, México Bioclúster and Agroclúster: Dairy and Confectionery Raw Materials and Supplies

-  -  -  -  - 

Raw Milk Salt extraction corn Sugarcane Chemicals preparation

Transformation Machinery and Support Activities Tratamiento&y& envasado&de&leche& líquida&

6

Value activities [Producers and Transformer]

Local and External Players

Best Practices in Sustainability Criteria

Elaboración&de& productos&lácteos&

311513%

1050&

311511%

-  -  -  -  -  - 

9

Bebidas&base&de&Leche&

Elaboración&de&leche& en&polvo,&condensada&y& evaporada&

022.12 Queso&y&Cuajada&

311512%

5

Industries and related services (Complementary and support)

Elaboración&de& derivados&y& fermentos&lácteos&&

Yogur& 022.31

024.1H9

Cul`vo&de&caña&de& azúcar&

Elaboración&de&cacao,& chocolate&y&azúcar&

Preparaciones& alimen`cias&con&cacao&

Elaboración&de& productos&de&confitería&

Comercio&al&por&mayor&de& dulces&y&materias&primas& para&repostería&&

0114

1072,&1073&

311340,%311320%%

1073&

431180%

3111 Alimentos balanceados para ganado 3512 Industria química 3821 Maquinaria para la industria alimentaria 3410 Envases de cartón 3620 Envases de plástico 322210 envases de cartón

XIGNUX& SIGMA&Alimentos& PROBOCA&& CAPRICO& Alex&&&Tony& & & H .&& &

Frutech& Hershey’s& RAGASA& WRINGLEY& MARS& & & & &

-  -  - 

326110 fabricación de bolsas y películas de plástico flexible sin soporte 327213 fabricación de envases y ampolletas de vidrio 333291 Fabricación de maquinaria y equipo para la industria alimentaria y de las bebidas.

PIASA,&MEGAALIMENTOS,& INSTANT&FOODS&&

HH&CIIU&Codes& HH%SCIAN%Codes%

©COMPSTRAC 2008



Figure 1. Simplified map and portion of the dairy and confectionery EVS of Monterrey’s food industry. Extracted from Scheel, Parra & Aguiñaga (2013).

Synergy (inventory) of residues and wastes. It entails the identification of the residues and wastes generated

in each process along the EVS. The main focus here is, through a Material Flow Account to keep track of the inputs and output material flowing through the EVS. Then, after the residues and wastes are properly identified, they need to be quantified and characterized through sampling. If possible, it is advisable to properly tag these residues and wastes under the EPA Code (Environmental Protection Agency Code System). Figure 2 depicts a simplified map of the inventory or residues and wastes. Each process along the production chain, produces residues and wastes.



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS Production and Transformation Processes of Red Meat (Cattle) Residues Raw Materials and Supplies

Cattle

Transformation Machinery and Support Activities

Water

Transport Equipment

Value activities [Producers and Transformer]

Lairage

Stunning

Blood Generated Residues Collateral Chain

Electricity

Refrigerators

Bleeding

Stunning Pen

Skinning

Hair, Skin, Horns, Bristles, Scurf, Cuticules & Dirt

Evisceration

Overhead Rails

Carcass Splitting

Scald Tank

Trimming/ Dressing

Rumen contents, Urinary bladder, Gall bladder, Uturus, Rectum, Udder, Foetes, Oesophagus, Brain, W a t e r (with blood, faeces, entrails, dirt, etc.)

Bone dust

Washing

Lairages

Cutting/ Deboning

PackingChilling

Hoofs, Snout, Ear, Penis, Fat

50% Byproducts



Transformation Figure 2. Simplified map and portion of the red meat residue and waste identification map. Extracted from Scheel, Thermal convertion (Fat Processes

into Biodiesel)

Chain Parra & Aguiñaga (2013).



Residues based regional synergies. The previous steps, may uncover the potential synergistic combination Process Pending..Protein

Lysine (Blood) of these residues and wastes content for generating valuable products for the region. Examples of these synergies ! !

! populate the industrial ecology literature such as the case of Kalundborg in Denmark (Erkman, 1998; Gertler, & !

Ehrenfeld; 1996; 1997, Gosgriff & Steinemann, 1998; Jacobsen, 2006), the Guitang Group in Guigang, China (Mathews & Tan, 2011; Zhu & Cote, 2004; Zhu, Lowe, Wei, & Barnes, 2007), Jyvaskyla region in Finland (Chertow, 1998; Korhonen; 2001; Korhonen, Wihersaari, & Savolainen, 1999; Van Berkel, Willems & Lafleur, 1997) and Kwinana in Australia (Van Beers, Corder, Bossikov, & Van Berkel, 2007). Figure 3 depicts the symbiotic linkages in the city of Jyvaskyla, Finland.



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

Figure 3. Jyvaskyla, Finland. Whole network for waste, residues and /or by-products exchanges within the industrial ecosystem. Each node represents a firm, and the lines indicate the residue exchange between two firms (arrows point to receptor). Extracted from Aguiñaga (2016).

Identification of sustainable value opportunities. It entails the identification of economic value opportunities

at the triple bottom line (Elkington, 1997) based on industrial ecology principles. The inventory of waste and residues’ characteristics along with the identification of their generating processes allows for an analysis of opportunity and potential synergies among players of a network (Krajnc, Mele, & Glavič, 2007). By constructing the EVS where both production and residues chains are depicted, it is possible to identify the composition and amounts of residues generated along with the production of the dominant product as well as the potential synergies which could traduce into business opportunities, better quality of life while building ecological resilience.

Processes and technologies identification. To create synergies, it is necessary to identify processes and

technologies that are capable of creating the maximum value from residues and wastes. This phase encompasses the identification of processes and appropriate technologies necessary for transforming residues and wastes into environmentally friendly, socially inclusive as well as economically competitive wealth.

The previously mentioned classification codes are important in this phase as the classification provides the

ability to compare processes, residues and products across countries, thus facilitating the research for these needed valorizing technologies and processes.



17

D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS Linked producer-product matrix (LPPM). In order to capitalize the value opportunities, this step entails the



construction of the linked producer-product matrix, so each node of this cascade turns into a start-up with its business processing units (BPUs) and products following the cascading principle of Gunter Pauli (2010). Therefore, in this phase, the cascading startups based on industrial ecology systems are produced. An example of this is the case of nejayote, a residue derived from the production of the tortilla (see, Vazquez, 2014). Figure 4 represents how this residue is converted into three products throughout alternate chains whose ends

ZERO-RESIDUES INDUSTRIAL ECOLOGY SYSTEM (ZRIES) optional vanillin production.

represent a new venture. These ventures entail the production of broiler’s food, methane and fertilizer with an

Slurry Residues from Nejayote Sedimentation Period

Broilers’ Food Star-up

Sedimentation centrifuged

Solid Fraction drying

Milling

Storage

Final Product 18.7 kg per m3 of Nejayote

Slurry Residues (smaller particles)

Methane Star-up

Hydrolisis

Acidogenisis

Acetogenisis / dehydrogenation

Containing

Final Product: 1.529 m3 of Methane per 1 m3 de Nejayote

Storage

Final Product: Fertilizers

Remaining Solids Fertilizer Production Star-up

Vanillin Producer Start-up

Milling

Extraction

Final Product: Vanillin

©CScheel(

12



Figure. 4 Nejayote residue from tortilla production as raw material for three cascading residue-based ventures. Extracted from Scheel (2016). Systems dynamic modeling. Introduced by the MIT professor Jay Forrester in order to analyze complex

business issues, system dynamics (SD) represents a mathematical modeling framework used in order to understand the relationship among the different components of the system. Therefore, in order to understand the relationship among the variables such as residues and wastes, qualities, transformation processes, quantities, valorized products, costs and the like, SD is considered as one of the best suited scientific methodology for achieving it. Therefore, SD modeling represents the methodology employed in this step as it suited for addressing complex problems. It is able to simulate different scenarios with possible solutions. Furthermore, this phase entails the creation of several scenarios that allow identifying which stakeholders (enterprises, organisms and/or institutions) must be involved in order to make the proposed start-ups’ cascade, deriving from the transformation of residues and wastes, holistically profitable.



18

D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS Start-ups’ clusterization strategies. This phase involves the development of activities in order to formulate a

strategy for clustering all elements both necessary and sufficient to exploit the value opportunities of the region. Here, the ABIIGS (academy, banking, infrastructure, related industries, government, and social capital) are taken into account n order to incubate the proposed multiple start-ups’ cascade.

The presence of entrepreneurs with systemic vision is of vital relevance for the achievement of start-ups. We

can identify three main types of entrepreneurs namely the classic entrepreneur, the ecopreneur and the systemic entrepreneur. Figure 5 depicts the transition from small business ventures to the systemic entrepreneur and table 1 synthetizes and contrasts these types of entrepreneurs (for more details see, Aguiñaga, 2016).

Small Business Venture

Classic Entrepreneur

Ecopreneur

Systemic Entrepreneur



Figure. 5 The evolution of the entrepreneur Table 1. Conventional Entrepreneur, Ecopreneur and Systemic Entrepreneur (business as unusual) comparison.

Classic Entrepreneur

Ecopreneur

Systemic Entrepreneur

Based in creating wealth Innovate way of creating products through all available source

Based in sustainability Innovate through creating new products based on available resources with low environmental impact Import and export the needed materials and products Thinks in close systems Uses intermediaries and distribution channels efficiently Focuses on process efficiencies

Based in autopoiesis Innovate through creating new products based on residues, wastes and by-products

Import and export the needed materials and products Thinks in close systems Uses intermediaries and distribution channels efficiently Focuses on profit maximization and growth Do not used subsidies (environmental related) Aims at creating wealth Driven by market opportunity

Get advantage of environmental related subsidies Aims at creating wealth through sustainability Driven by environmental market opportunities Devise ingenious strategies to marshal their limited resources

Goes beyond efficiency proposing new ways for doing things Is against subsidies (inefficient, expensive etc.)

Rely on intuition, experience and financial tools Takes previous failures as valuable experience for future entrepreneurships Starts with a business plan

Rely on cash flow analysis

Aims to increase the purchasing power of people Driven by problems (ecological, social and economical) Devise ingenious strategies based on natural processes (biomimicry) to marshal the available resources Rely on multiple cash flow analysis

Takes previous failures as valuable experience for future entrepreneurships

Rely on success cases developed around the world as source of knowledge for future entrepreneurships

Starts with a business plan

Seeks to build a competitive advantage Focuses on an opportunity for changing the way people live and work Can work with governments

Seeks to build a sustainable competitive advantage Focuses on opportunities for changing the way people live and work while protecting the environment Can work with governments

The business plan is created once the opportunities are identified and serves as the starting point of the implementation phase Builds a competitive advantage from the beginning by solving problems through innovative processes Focuses on solving several problems enhancing the way people live

Devise ingenious strategies to marshal their resources

Source: Extracted from Aguiñaga (2016)

Uses only inputs available in the region and the outputs satisfy the region’s demands Thinks in open systems Avoids using intermediaries

19

Prefers working closely with private firms

D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS Systemic assembly of regional business model. The final step entails the assembly of regional business models

of existing firms and newly created residue-based ventures. An example of this type of regional systemic assembly is the Guitang Group (GG) in Guingang, China which operates one of China’s largest sugar refineries. This group invested in developing its own collection of downstream companies to utilize nearly all residues, from sugar production (Wei, 2004). The key waste-based ventures created in this group entail an alkali recovered plant, a pulp mill, alcohol plant and fertilizer plant (Zhu & Cote, 2004; Zhu, Lowe, Wei, & Barnes, 2007) (Figure 6).

Figure 6. Guitang Group, Guingang, China. Whole network for waste, residues and /or by-products exchanges within the industrial ecosystem. Extracted from Aguiñaga (2016). The SWIT’s Roadmap to circularizing linear chains, have been used in diverse research cases. These cases entail among others, the valorization of the tomato industry production in rural areas (Scheel, Aguiñaga, & Galeano, 2012), the valorization and circularization of residual effluents from the biocluster in Monterrey, Mexico (Scheel, Parra, & Aguiñaga, 2013), the circularization of the tortilla production chain (Vazquez, 2014) as well the evaluation of world class zero-waste communities (Scheel & Aguiñaga, 2014).

Therefore, the SWIT’ roadmap has proven its utility as a method for circularizing liner chains. It encompasses

a series of steps able to be applied to either a product, an industry or a region (Scheel, 2016) as can be seen in table 2. However, this last unit of analysis has not yet been tested. Therefore, the present CEIP endeavors not only providing the roadmap for circularizing linear value chains, but also deploys it over a region using systems dynamic modelling.



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS Table 2. Comparison of the constructs and level of analysis of the frameworks and concepts

Framework or Concept

Proponents

Constructs

Level(s) of Analysis

SWIT

Scheel (2016)

Dynamic valorization of wastes and residues; nonusual ventures based on residues and wastes

Circularizing of Glycerol byproduct of the African palm tree and Water effluents from the food industry, Residues of the tortilla production (ZRIES), Regional circular value ecosystem of selfsustainable communities Higueras, Mexico

Micro (Zero-Residue Industrial Ecology System i.e. Firms' Value Chains), Meso (Circular Economy Value Systems communities) and Macro (Regions) (Geng & Doberstein, 2008; Yuan et al., 2006).

Circular Economy

Ellen McArthur Foundation Eds. (2012-2013); McDonough and Braungart (2002, 2013); Stahel (2010); Webster (2015)

Close-loop value chain, technical nutrients and biological nutrients, product as service, upcycling

Cisco, Caterpillar, Cyberpac, Desso, EPEA, Foresight Group, ISE, Marks and Spencer, Product-Life Institute, Ricoh

Micro (Value Chains), Meso (Firms and Industrial Parks) and Macro (Regional Synergies and Communities) (Geng & Doberstein, 2008; Yuan et al., 2006)

Industrial Ecology

Ayres (2002); Chertow (2000); Frosch and Gallopoulos (1989); Graedel (1996); Korhonen (2001); Norhona (1999)

Symbiosis; Locality, Diversity, Roundput and Gradual Change/Interdependence

Kalundborg, Denmark; Guingang, China; Kwinana and Gladstone, Australia; Barceloneta, Puerto Rico; Kawasaki, Japan

Micro (Firm), Meso (Industrial Park) and Macro (Ecosystem) (Graedel, 1996); (Noronha, 1999)

Systemic Thinking

Senge (2006) Senge et al (2015), Sterman (2000), Webster (2015)

Systems design; systemic thinking; stocks and flows; non-linearity

Nelson Mandela's Leadership; Darcy Winslow (Nike); Roca Inc.

Systems (micro, meso and macro)

Blue Economy

Pauli (2010); Benyus (1997)

Cascading business model; multiple cahsflows; Biomimicry (innovation inspired by nature)

Las Gaviotas, Colombia; El Hierro island (Canary Islands)

Firms and Regions

Source: Extracted from Aguiñaga (2016)



Cases

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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

CHAPTER 4: METHODOLOGY The methodology employed in the current CEIP was Systems Dynamic Modeling. Literature review suggests that SD is the prevailing methodology for studying complex systems such as regions as it is able to model and simulate and analyze long-term problems. It can integrate qualitative factors and defining learning loops into the dynamic modelling of a system. It provides a useful methodology to create different scenarios based on specific assumptions and values of the variables, therefore foreseeing through the simulation results how the system reacts to changes. According to Sterman (2000), the interaction of feedback loops is the source of behavior complexity in systems. SD is composed by four building blocks namely stocks, flows, converters and connectors (Sterman, 2000). The stock represents accumulators, flows changes the conditions of stocks, arrows establish the relationship among the elements of the model and the converters or auxiliary variables house built-in functions or graphical data relevant to the model. Moreover, SD can deal with the complexity and the dynamics of physical processes and management strategies, making it suitable for the current research purposes. It can be applied to feedback systems, raging from ecological systems, business systems, environmental systems and political systems (Sterman, 2000; Dyson and Chang, 2005). In sum, SD provides a holistic approach that takes into account the social, environmental and economic aspects that need to be analyzed in a time scale reference (Pubule et al., 2015). Therefore, it improves the learning process of the users as simulation models serve as an imitation of reality and provide a means for conducting experiments in areas with great complexity (Opel, 1993). The following section describes the case of Higueras, Mexico, the social, economical and environmental situation of the village and its main problems. Then, a systemic solution based on the SWIT methodology in order for the village to make a transition from highly dependent towards self-sustainable using SD modelling is presented. Given its capability for scenario creation and its ability to portrait the different behaviors of the community as ecosystem, SD can show how much impact certain waste sharing activities, technologies and stakeholders’ involvement can have over the community (system).



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

CHAPTER 5: CASE STUDY HIGUERAS VILLAGE, NUEVO LEON, MEXICO Located 58 km north of Monterrey, capital city of the state of Nuevo Leon, Mexico (see Figure 7), Higueras is a small village of only 1,594 inhabitants (INEGI, 2010) located within the boundaries of the natural reserve called Sierra Picachos (Figure, 8). With a total land area of 600.2 square kilometers, Higueras has an extreme climate with temperatures ranging from -2°C to 43°C. Flora and fauna are abundant (see Appendix 1). The village has an increasing food, energy, economic and health dependence over the state capital, which creates inertia preventing the region to achieve self-sustainability. The majority of the population lacks of basic environmental education regarding the correct use and management of local natural resources, compromising their long-term supply. Given its reduced size and small population, the community of Higueras lacks of strong attractors and major economic centers. Therefore, population emigration is a common trend as much of the young and productive inhabitants opt to head north in search for the “American dream”. Recently, an initiative to build a quarry by a local firm was regarded as an opportunity for creating more jobs and rebooting the regional economy. The quarry promised employment and opportunity for both skilled and unskilled workforce, but environmental activists and non-profits organizations claimed that the quarry would create an unsustainable source of jobs at the expenses of the environment, since mining activities are pollutant for the environment as well as for human health and unsustainable even after being abandoned. The community of Higueras acknowledged that the quarry would bring in the long term more environmental costs that would offset any shortterm benefit. Therefore, they demanded for a sustainable solution.



Figure 7. Localization of Higueras in the State o f Nuevo Leon, Mexico



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS



Figure 8. View of the Sierra Picachos natural protected area.

HIGUERAS’ CHALLENGE

The population of Higueras (stakeholders) must be attracted and convinced in order to demonstrate that the regional circularization is not only feasible but a transition needed in order for the region to migrate towards selfsustainability. Additionally, they must be persuaded that long-term benefits are preferred over short-term ones. A dynamic economy able to compensate the costs of opportunity of not building the quarry and eventually other unsustainable economic activities is needed. Therefore, it is imperative to create alternative proposals for counteracting any resulting win-lose scenario and create truly sustainable projects. In other words, the real challenge is to develop a model than allows us to measure and communicate the results of the potential of the region sustainable readiness under different scenarios. A model that create enough jobs, economic wealth while at the same time creating natural resilience and strengthening the social fabric, through projects in form of new ventures committed to create other forms of wealth, economically viable and competitive, socially responsible and inclusive while at the same time environmentally recoverable and resilient building (Donald, 1999; Scheel, 2014).

Therefore, the final aim is to develop a Regional Circular Value Ecosystems by focusing on strengthening the

following parameters: (a) capacity to achieve food security (through the cultivation of most of their own food), (b) creation of rich topsoil in order to regenerate the natural environment (resilience), (c) improved health through



24

D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS correct use and exploitation of regional natural resources and (d) improve regional water usage. Figure 9 depicts the original linear value chains of Higueras and the residues generated.

Figure 9. Original linear producers of Higueras, Mexico. Extracted from Aguiñaga, Henriques, Scheel and Scheel (2016) In order to improve these parameters, the SWIT roadmap for circularizing linear value chains was deployed (Scheel, 2016).



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

CHAPTER 5: SYSTEMS DYNAMIC MODELING MODEL CONSTRUCTION The structures of the SD models have been assembled and developed by integrating data from experts’ interviews, as well as secondary sources and field observation. The Vensim® software is considered an appropriate modelling software for constructing and simulating the complex system in this study, as it represents a powerful, freeware tool for communicating systems dynamics processes, interdependencies and problems. The model was constructed in the following manner: th

th

First, several visits to the Village of Higueras (February 4 2014 and June 10 2014) were performed in order to identify the main economic activities, and waste and residue producers. After several unstructured interviews with local entrepreneurs and the people from Higueras, two important R/W producers and one decomposer firm (Vazquez, 2014) were identified: (a) goat cheese factory, (b) an oregano plantation and (c) a red worm farm respectively. Therefore, they were subject to a complete analysis of their linear value chain, focusing on the inputs and outputs generated. Afterwards each one of the EVS were constructed. EVS chains enable to map production and collateral (R/W) chains of each process of the economic activities in the region. In this case, the three systems where mapped. The result is a diagram that allows us to identify the amounts and composition of residues generated along with the production of the dominant product, and potential synergies of each of the residues. The EVS diagram, serves as the base for further researching potential transformation processes, available technologies and business opportunities for R/W. After all the residues were analyzed and the best and most appropriate technologies and processes for upcycling residues and sharing across the systems were found, the following step entailed to model all the Regional Circular Value Ecosystem in order to foresee its impact on Higueras village. A causal loop diagram (Figure 10) was constructed portraying all the connections among the subsystems identified at Higueras and the SD model structure. The present CEIP argues that All the stakeholders and participants in linear production chains can be circularized, creating networks of knowledge and residue sharing beyond that of industrial symbiosis. One of the objectives is to valorize R/W through upcycling (McDonough & Braungart, 2013) processes and technologies. This synergistic valorization creates a suppliers-nutrient-producer-product-nutrients loop, consequently closing the value cycle and creating sustainable (triple bottom line) wealth to the region (Elkington, 1997). Higueras village has daunting challenges to overcome, in order to restore its economic wealth, social fabric and environmental resilience. Luckily, Higueras has local economic activities subject of the present study, which through proper technology, innovative business models as well as a lot of creativity, have the potential to improve the region. The following section, describes each one of the most important subsystems at Higueras in detail.



26

D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS HIGUERAS VILLAGE (Population)

Available Food & Land for Goats + + GOATS +

+

- Available Space for Worms

++ Composting Material + WORMS +

Revenues + + ++ + Cheese & Butter

+ Humus & Leachate + +

+

Whey Derived Products

+

Fish Food +

Soil Recovery (Ecological Resilience)

+ Oregano Leaves

Oregano Waters, Oil & Capsules

OREGANO + PLANTATION +

-

+

Available Space for Oregano

Quality of Life + +

Fish Farm +

+ +

Urban Farms +

Crops

Health

+ + Water and Food Security +

Figure 10. Causal loop diagram of the model’s structure. Oregano plantation

The oregano system comprises a plantation of oregano (Poliomintha longiflora) with a continuous production of leaves as condiment (Figure 11). Packaged and sold to local restaurants, it is worth stressing that this type of oregano is endemic and contains high amounts of carvacrol and thymol, two substances with antiseptic properties (Rivero-Cruz et al., 2011).



Figure 11. Oregano Plantation at Higueras

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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS Despite the main product is the oregano leaf, residues in form of oregano stems are subject to two valorization processes: (a) Hydrodistillation for obtaining essential oils and (b) encapsulation for nutraceutic purposes (Figure 12). Hydrodistillation process yield two main valorized products, essential oils and oregano waters, both powerful natural antiseptics, fungicide and disinfectant (Gündüz, Gönül & Karapınar, 2010; Karabagias, Badeka & Kontominas, 2011). Residual stems from hydrodistillation, containing no chemical value, are used as feedstock in the red worm farm composting process. Oregano capsules provide another product derived from a residue. These capsules represent a natural nutraceutic that fight fungus and microbes.

Figure 12. Block Diagram of Oregano Plantation System Goat Cheese Factory

The goat cheese factory at Higueras (figure 13) houses 130 goats (Alpine and Nubian breed) for milk production. It produces cheese and butter marketed as premium products in convenience stores in the capital city. Cheese production generates wastewaters that contain large amounts of dissolved whey that has a high chemical oxygen demand (Lebrato et al., 1990). Therefore, whey discharges must be reduced to zero through value adding processes.



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

Figure 13. Cheese Factory at Higueras

The three products that can be obtained from whey are: (a) isotonic protein beverages, (b) whey protein

powder and (c) fish food (Figure 14). The production of isotonic beverages and whey protein powder are both simple processes yet highly valuable as they provide a nutritional supplement given its high protein and casein content (Mølgaard, et al., 2011). Moreover, given the local presence of a lake, the fish food derived from dried cheese whey is devoted for feeding the local fish and turtle population.

Finally, two other residues are generated. First, derived from the drying processes, residual water is obtained

which serves for local irrigation of urban gardens. The second residue is goat manure, which enters the red worm composting process as a prime feedstock.

Figure 14. Block Diagram of Goat Cheese Factory System



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS Higueras’ Lake

Higueras’ lake (Figure 15) houses fishes and turtles, which represents a potential tourist attractor as well as local food source. Moreover, the lake has the space and the conditions to generate two star-ups, a fish farm where catfish filet is produced and a microalgae farm, feedstock for animal feed given its high protein content. Therefore, the lake receives fish food and provides food availability for both the village and the cattle.



Figure 15. Higueras’ Lake Urban Gardens

Urban gardens (Figure 16) are being developed throughout Higueras in order to develop the three axis of sustainability. On the economic side, urban gardens are productive poles where food production for self-consumption increases their food independence, and any surplus could eventually translate into marketable organic products. Socially speaking, urban gardens help to restore and strengthen the social fabric as the people gather to perform joint agricultural activities. Finally, the environment is also benefited with the increase of food independence, as carbon footprint is lessened, and more importantly given that the construction of urban gardens promotes re-vegetation and soil recovery through the use of solid humus and leachate from the red worm system. The urban gardens also serve as nursery for the recovery of endangered endemic species.



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS



Figure 16. Urban Gardens at Higueras Red Worm Farm

The red worm farm (Eisenia Foetida) produces three main products: (a) solid humus, (b) leachate (liquid humus) and (c) worm meat (Figure 17). Three physical inputs are required for the production of these products: (a) water (a) manure and (c) organic matter, all of which can be obtained locally from the lake, goats and the Higueras village respectively (Figure 18).

Figure 17. Red worm composting



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

Figure 18. Block Diagram of Red Worm Farm System





The solid humus and leachate are produced concomitantly. Both products are the best know natural

fertilizers as they contain all the micro and macronutrients needed for agriculture. Therefore, these two products have the potential to enrich substrate and re-vegetate, consequently remediating the eroded soil (Piippo et al., 2014). Finally, the worm meat produced by the excess of worm population serves as fish food for the lake. In sum, the most important players based on their systemic wealth creating potential and focus of the present CEIP entailed the goat cheese factory, the oregano plantation, the village lake and the urban gardens. Moreover, also depicted are their connections with a key decomposer (red worm farm) and enabler (technologies) systems that are capable to transform and valorize R/W into a system of capital for the entire region. Figure 19 depicts the all the potential synergies among all the stakeholders of the community. Moreover, Table 3 summarizes all the transformation processes and upcycled products from residues of all the analyzed subsystems.



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

Figure 19. Synergy Map of Higueras Village’s main stakeholders and economic players Extracted from Scheel (2016). Table 3. Summary of transformation processes and upcycled products from residues.

Actor Goat Cheese Factory

Residues Shared

Higueras' Village Lumber Mill

Organic Waste Sawdust Wood

Spray Drying Drying Condensation Filtration and addition Red Worm Composting Hydrodistillation Condensation Encapsulation Red Worm Composting No transformation No transformation

Red Worm Farm

Hummus Leachate

Biological metabolism Biological metabolism

Oregano Plantation

Cheese Whey

Transformation Process

Manure Stems Spent Stems

Extracted from Aguiñaga (2016).

33

Product Whey Protein Fish Food Water Isotonic Beverages Humus and Leachate Essential Oil Oregano Antiseptic Water Oregano Capsules Humus and Leachate Firewood and Substrate Firewood and Construction Material Solid Fertilizer (Humus) Liquid Fertilizer (Leachate)

D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

THE REGIONAL CIRCULAR VALUE ECOSYSTEM OF HIGUERAS: A 10TH ANNIVERSARY SCENARIO

th

It is the 10 anniversary since Higueras started to implement all the synergies among all stakeholders and

economic poles in the region. The achievements have been manifold. On the one hand, and on the business as usual field, the production of goat cheese by the local factory has reached a 55-ton production creating revenues of nearly $900,000 USD. Likewise, the local oregano producer has harvested more than 18 ton of oregano leaves, creating revenues near the $400,000 USD. On the other hand, non-usual business ventures based on R/W have achieved at the whole system level, equivalent revenues for more than a $1,000,000 USD (taking into account the market price of the products manufactured from R/W). Beyond the economic aspect, more importantly the measures regarding the achievement and strengthening of the four SWIT parameters are worth mentioning in detail as follows: Water usage. The efficient usage of water and its proper recovery from the several transformation processes

along the Regional Circular Value Ecosystem have saved the village of Higueras the equivalent of 665,000 liters, therefore improving the water availability. Moreover, derived from one of the wastewater recovery processes, the transformation of cheese whey into isotonic beverages has been possible. The daily production of isotonic beverages now provides a free nutritional supplement to the approximately 225 children (15% of the population) at Higueras. Health. Health parameters regarding gastrointestinal diseases have never been lower. The usage of the

oregano waters from the distillation process as antiseptic for disinfecting the locally grown vegetables has been both effective and widely spread practice among villagers. Coupled with the free intake of oregano stems, which strengthens the immune system, less common illnesses have been present at Higueras. Topsoil recovery (resilience). Ten years later, more than 660 hectares have been fertilized using worm

leachate, improving the soil quality and recovering the previously poor soils and re-vegetating Higueras. Additionally, solid humus used on the construction of urban gardens, have provided nearly an additional 1.5 hectares of recovered soil suitable for gardening vegetables. Food Security. Derived from the topsoil recovery, now, in the tenth year, these urban gardens provide all the

vegetable requirements (383 vegetables a day) for completely satisfying the vegetable requirements of 75 families, consequently reinforcing their self-sustainability. Ten years have passed and the quality of life has been steadily improved. More villages have started to imitate Higueras, as it has become a truly sustainable village. Although successful, new challenges arise as more people come to populate the village, therefore it has to be constantly reinventing itself and evolving in order to maintain its balanced and harmonic growth.



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D EVELOPING A R EGIONAL C IRCULAR V ALUE ECOSYSTEM THE CASE OF H IGUERAS

CHAPTER 6: DISCUSSION The model developed for Higueras and its accompanied simulation results suggest a real increase in the economic, environmental and social wealth of the village. Commencing with the oregano system, which is already working, the potential benefits of its residues are important for both the owner and the community. Benefits to the owner include but not limits to a considerable increase in revenue as well as the satisfaction of knowing that residues which in the past generated nothing but expenses, now are feedstock for environmentally responsible, economically viable and socially beneficial products. For the village, the benefits include the opportunity for a sustainable source of local and low cost nutraceutic such as the essential oils and oregano waters. The applications of these revalorized products from wastes are diverse ranging from food preservatives to antiseptics for medical care usage. The goat cheese system provides important insights regarding other benefits equally important to the village. First, through the usage of the cheese whey residue, the village children are capable for enjoying a constant supply of protein beverage with high casein and protein content, especially beneficial for their physical development. Additionally, the production of fish food from whey represents an opportunity for increasing the lagoon fish and turtle biomass. Increasing the lagoon biomass would foster local tourism as well as providing a local source of food. Moreover, by eliminating to zero residual cheese whey discharges, the environment is also benefited. Both the oregano and goat systems produce second-degree residues. Waste streams that are derived from the transformation processes of residues and wastes. Given the meticulous selection of transformation processes of first-degree residues, these two systems attain a zero-waste degree, meaning that no residue produced along the main production chain (product), or collateral chain (revalorized product) is left unused. Examples are the use of the residual water stream derived from processes such as the hydrodistillation of oregano stems, the production of whey protein and fish food, for local gardening or the residual stems from the oregano system which leads to the Red Worm system. The red worm system represents a champion when it comes to resilience building and local metabolism. The capacity of the red worms to transform goat feces and organic residues from both the village and the oregano system into highly valuable products is vastly prized. On the one hand the high reproduction rate of worms, provide a constant supply of worm meat as fish or poultry feed of high quality. On the other hand, the production of solid humus and leachate represents a pivotal strategy when it comes to soil remediation.

Simulation results suggest a clear synergy among these systems. These synergies promote not only revenues,

or a reduction on the environmental impact. Each transformation process requires human capital, therefore these initiatives creates job opportunity through the creation of new business ventures devoted to seize the potential sustainable wealth creation dwelling in residues and wastes. On monetary terms, the simulation results show a hidden opportunity worth $1,661,560 MXN (equivalent to $105,000 USD) on revenues derived from residues and wastes.



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CHAPTER 7: CONCLUSIONS Current strategies such as recycling, reusing and reducing are not enough as a sustainable solution to face the rapid growth of population and industrialization as well as the escalating unavailability of natural resources. Therefore, we call for a new paradigm for achieving truly sustainable regions in what has been termed Regional Circular Value Ecosystems. This new perspective is built upon the systems thinking and well-known principles of circular economy and blue economy by not only focusing on closing the loop of end of life products minimizing and sharing wastes, but to create sustainable wealth from all the residues created within a region by applying upcycling principles through appropriate technologies and new business models. A system dynamic model is developed to create scenarios derived from the regional waste and residue dynamics as sustainable wealth creators. A case study for the village of Higueras, Mexico presented the beneficial impacts of waste valorization using cascading-like and symbiotic interaction among the stakeholders. The interaction among the diverse stakeholders involved in the regional dynamics were examined throughout time using Vensim® software package. The model developed for the Village of Higueras, beyond providing a tool for simulating each and the overall village system, it enables a proper mechanism to answer several strategic decisions regarding the future of Higueras as a potential self-sustainable village as well as provide a support decision system through scenario development. Scenarios allow foreseeing the repercussions of variables to the whole system and most importantly how the regional redesign affect the parameters of interest. How many hectares of eroded soil could be possible to re-vegetate and therefore to remediate by inserting the locally available fertilizers? How many people would be capable to meet their food requirements by consuming the locally produced vegetables while taking into account the dynamics of soil remediation? If not enough, how much land would be required to be cultivated in order for the local production to fulfill it? To what extent products such as oregano oil, oregano waters are abundant enough to start their mass commercialization? If needed, how many hectares would be necessary for the plantation to have in order to meet such requirements? How long would it take the lake to create a ton of fish without compromising future availability? These are some questions derived from scenario simulations that can be answered by the model. The answers to these questions support our hypothesis that residues and wastes harness the potential to create truly sustainable wealth and more importantly, that linear value chains on a region can become circular therefore creating a circular value ecosystem. Also, the usage of system dynamics is pivotal when assessing the true impact and sustainable (systemic) viability of non-usual business models based on residues and wastes. Therefore, it is concluded that the proper systemic seizing of the potential of residues and wastes through the use of innovation, new business models and appropriate technology and processes, is an effective way to redesign and transform regions in order to turning them self-sustainable and at the same time economically competitive and socially inclusive.



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APPENDIX I FAUNA AT HIGUERAS

Cougar at Higueras



Black bear at Higueras

Deer at Higueras







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FLORA AT HIGUERAS

Local thorn tree flora

Maguey

Flora at the top of Sierra Picachos









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HIGUERAS’ LANDSCAPE











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