Boom or Bust for Our Planet?

Dick Smith: "We have a real problem as our economic system is built on perpetual growth, when everyone knows you can't have perpetual growth," he says. "One day it has to stop." << That's it. That is all there is. Can we get on with addressing this instead of whining about it like a bunch of over-indulged children?!

Reposted in full from Adelaide Now, 29 April 2011

'A crowded planet, with more people taking more of the Earth's resources, does not sound appealing. We have seen water shortages, fuel price rises, congested roads and a crisis in housing affordability. Questions are now being asked on our capacity to feed an extra two billion people - in just two decades.

Millionaire Dick Smith has just finished writing a book on the topic. Expect to hear more from the man at the centre of the population debate in Australia. "We have a real problem as our economic system is built on perpetual growth, when everyone knows you can't have perpetual growth," he says. "One day it has to stop."

The United Nations Population Division says the world will hit seven billion this year. We may double that by the end of the century. The UN offers scenarios based on different fertility rates. Under the medium scenario, the population peaks at 9.4 billion in 2070 and starts to decline. If fertility remains high in developing countries, we may have a population of nearly 30 billion in 2300.

How could we feed and house that many people? Something has to give.

Smith says Australia's growth rate, at 2.1 per cent last year, is "totally irresponsible". "That means we double every 30 years," he says. "By developed world standards we're one of the highest, above India, above Bangladesh, above America."

Twice as many people means each person would have access to half the amount of resources we are consuming, he argues.

There must be a better way, an economic system not based on growth, not just about "having more people and using more resources".

The UN Environment Program has released a guide for policy makers. Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication explains how a green economy can generate as much growth and employment as the existing world order.

This, however, "will require world leaders, civil society and leading businesses to engage in this transition collaboratively".

"It will require a sustained effort on the part of policy makers and their constituents to rethink and redefine traditional measures of wealth, prosperity and wellbeing," the authors write.

"The biggest risk of all may be remaining with the status quo."

University of Adelaide Environment Institute director Professor Mike Young contributed to the chapter on water resources.

"At the global level, finding ways to feed all these people and to supply the water they need is really challenging," he says.

"If we can be really clever, we can both water the world and feed it, but we're going to have to do a lot of really smart innovative stuff. If not we're going to have massive famines, water shortages and crises in many parts of the world. That's the big picture."

Wealthy nations have extra responsibility as they consume far more of the world's resources per person.

"Policies designed to increase population have to be examined very, very carefully - until we get all of the resource management, environmental issues sorted out - particularly carbon, water and controlling land degradation," Prof Young says.

Several factors contribute to population growth. The number of babies born on average to each woman, is just one. People are also living longer.

"The big question is whether we should make Australia an environmental fortress in a degrading world, or take our global share of responsibility and allow populations to increase in Australia to take pressure off the Western world," Prof Young says.

The Australian Population Institute has a vision for a "greater Australia", with a "robust population" of 30 million. President Jane Nathan says the group is convinced Australia needs to grow to maintain a high quality of life.

The Urban Development Institute of Australia agrees. President Peter Sherrie says there are 5.1 working Australians to every retiree. Unless we maintain strong population growth, by 2030 this will reduce to 2.9 working Australians for every retired person.

"We're going have to severely increase taxes to maintain the standard of living we're used to, or we need to increase our population," he says.

"Our whole economy is based on growth, it has been since the start."

Former prime minister Kevin Rudd's "Big Australia" has given way to a commitment to sustainability, though what that means is not clear.

"The focus of this policy is on the distribution of population across Australia rather than setting arbitrary targets or caps," says the Minister for Sustainability, Environment, Water, Population and Communities, Tony Burke.

The Government released an issues paper last year and has been "going through an extensive community consultation process in which a whole range of groups and organisations have put forward their views for the future of our nation".'

Thought Bubbles on Population and Growth - Dick Smith

Reposted in full from Online Opinon, 20 April 2011

'

I read with interest and not a little dismay the recent On Line Opinion article by Ross Elliott. Mr Elliott is a property developer and his views are consistent with those few who stand to benefit from ever-increasing population growth in Australia: developers, media companies and of course retailers. But for most Australians, the advantages would be few and the negative effects would be many.

I don't mean to be unkind to the developers. In fact, I suspect secretly many of them agree with me that our headlong rush for crude population growth is undermining the quality of life of many Australians and doing nothing to help the rest of the world either. Recently I addressed a gathering of the Property Council of Australia, and privately many of the attendees said they agreed with me. We simply haven't thought through the negative consequences of population growth for Australia or the world.

Far from being a mere 'Thought Bubble' as Mr Elliot suggests, I have given the question a great deal of thought in recent times, and will be expanding on them at length in a book, The Population Crisis, to be published next month. Let me give you a hint of what it contains. But first, I would like to dispel a myth or two.

Firstly, Mr Elliot repeats a whopper first put out by the Murdoch Press which deliberately misreported my recent comments on the subject. I have never called for a 'two-child policy' as if there should be some kind of government edict setting a limit on the number of children Australian families should have.

Quite the contrary. I believe that once they are well-informed, Australians will make up their own minds about what they believe to be the right number of kids they have. What I do believe however is that it is high time we dump the wasteful baby bonus and other tax measures which currently cost us well in excess of $1 billion annually in artificially encouraging Australians to have three or more children. There are many good reasons to drop this silly scheme, not least of which is that it disadvantages those who choose to have small families, or none at all. Governments should get out of people's bedrooms full stop.

Again and again as I tour Australia discussing our failure to have a sensible plan for population, I ask simple questions: Why would we want to rapidly increase our population? What's so great about constant growth? What are the advantages for average Australians? I fail to ever get a convincing answer. The best the "pro-growthers" come up with is "because we can", and that of course, is no answer at all.

It's often claimed by the pro-growth lobby that Australia can never run out of land, because we have very low population density compared to our land mass. This is a really useless concept for making decisions about Australia's future. As has been well-established in report after report, Australia is best looked upon as two geographical nations: one a vast and arid interior with little value for settlement or agriculture; the other a narrow coastal strip with limited resources of soil, water and a fragile ecosystem. Necessarily it is this thin strip we must inhabit and it is far from being in endless supply.

Most mainland Australian capitals are now building highly expensive desalination plants just to supply drinking water for our existing population. Much of Australia is only just now emerging from a decade long drought that brought devastating consequences to our agricultural system. The history of climate in Australia - and the predictions of climatologists – suggest it is only a matter of time before drought returns and we must sensibly consider ourselves to be in a more-or-less permanent state of water scarcity. Dreams of turning back the northern rivers are nothing more than wishful thinking.

A lack of certainty with water means we must always be cautious about ensuring food security, not only for Australians, but for the millions of people around the world who depend on Australian grain and meat for their livelihood. For those who scoff at the idea of Australia one day running short of locally produced food, or having little or nothing to export, I urge you to read the report on our food security recently released by the nation's top scientific advisory body, the Prime Minister's Science, Engineering and Innovation Council.

The report sums up the challenge neatly, and makes it clear that our future is inextricably linked to population decisions:

The likelihood of a food crisis directly affecting the Australian population may appear remote given that we have enjoyed cheap, safe and high quality food for many decades and we produce enough food today to feed 60 million people. However, if our population grows to 35-40 million and climate change constrains food production, we can expect to see years where we will import more food than we export. We are now facing a complex array of intersecting challenges which threaten the stability of our food production, consumption and trade.

Like many developers, Mr Elliott sees our thin coastal strip as an abundant resource fit for exploitation. He has even previously written on the benefits of urban sprawl.

Yet such thinking never seems to account for the loss of prime agricultural land involved in building new outlying suburbs. I believe we have now reached a crisis point, concreting over our richest soils and most productive land. Just how long can we sustain the equation of increasing population and diminishing agricultural capacity? Once again the "pro- growthers" are silent.

Let's not for a minute underestimate the massive costs of sustaining our ever-expanding cities. The infrastructure costs of transports, and retrofitting the connections between the centre and the outer suburbs are immense. The newly elected State Government in Victoria has discovered that the costs of extending rail services to it new western suburbs has blown out to $5 billion and will be years behind schedule - if it is ever funded at all. All this for a couple of new stations.

These massive costs, faced by all our cities, will be borne by generations of taxpayers, yet any benefits will soon be swamped by increased numbers. As ever, we will continue to chase our tails on critical infrastructure as long as we remain addicted to growth.

Mr Elliott blames planning controls for restricting the release of new land for development, and in turn says this is to blame for Australia's precariously high property prices. He is surely being disingenuous, knowing full well that our massive population growth of recent years - close to 500,000 in 2010 alone – is the real reason for our unsustainable housing costs. We are now faced with another trap – needing more growth to maintain prices for fear of a vicious (and now probably inevitable) crash. It's this Ponzi Scheme economics that lies at the heart of most pro-population thinking.

The biggest one of course is the concerns about aging Australia and the costs of future pension payments. Never mind that in fact Australia has one of the youngest age profiles of any developed nation and studies by the Productivity Commission show the threat is exaggerated. Mr Elliot argues we must bring in more and more migrants to effectively pay the pensions of the retiring Baby Boomers or else we face ruin. Yet of course those migrants will in turn become elderly too one day, leaving us with an even bigger problem down the track.

The truth is most Boomers did pay their taxes in order to ensure a minimum pension and have been putting money away for their retirement. The problem is that governments, under pressure to supply the infrastructure to keep pace with the ever-expanding population, did not keep their end of the bargain. They have consistently failed to put tax receipts away at the necessary level to provide for pensions. And the reasons for this are pretty clear. Politicians are vulnerable to the pleadings of well-organised special interest groups, and one of the most effective has certainly been the pro-growth lobbyists and their willing accomplices in the media.

Mr Elliot claims Japan has suffered economically for failing to deal with its demographic challenges. In fact economists know the real cause of Japan's stagnant economy of the last decade: it is still reeling from the collapse of an unsustainable asset bubble, especially in property. The warning signs are there for Australia if we care to look. Now Japan must deal with a further massive blow, but at least its cohesive society is pulling together. One wonders if such a recovery from disaster would be possible if the nation was not held together by a common culture.

Yes, we could build a dozen Dubais along Australia's east coast, tear out every last piece of coal to power it, and import our food, at least for a while. Yes we could open the gates and bring in young migrant workers to pay for our current profligacy and prop up the property sector with no thought for the future. But the question remains, why? Who really benefits from such policies?

Later this year global population will pass seven billion. Mr Elliott may be relaxed by the slowing of absolute growth, but we are still adding nearly 80 million people to the planet every year and will certainly add at least two billion people more by mid century. With current trends in consumption, that means we need to find twice the energy and food we currently produce to supply the world's ever spiralling demands.

Can anyone really feel relaxed about the prospects of feeding, housing and powering a world that is already stretched to the limit? As we make the necessary and unavoidable transition from an oil-based economy, these demands will stretch our ingenuity to the limit - and perhaps beyond.

We have seen how fragile our growth-based economic system is. A collapse of the financial markets, followed by ghastly natural disasters have shown that we are just one unexpected shock away from crisis. It is foolish to expect that Australia will not be affected by these dangers, and we must prepare now for an uncertain future. The pursuitof endless growth is the least intelligent response we can make. We need a sensible discussion about the options and that means dispensing with the old myths that continue to cloud our thinking.'

Plea to Control Aussie Growth

Reposted in full from Adelaide Now, 26 April 2011

'Zoos SA says Australia's population, economic and immigration growth are unsustainable in terms of damage to the environment.

Zoos SA's Dr Chris West said that with 33,000 members who shared an interest in ecological matters, the organisation had a duty to speak out about growth and sustainability.

"We can't turn the clock back but we can't continue as we are. We need to look at the total cost, including the environmental, of any development that we take part in," he said. "Sensible objective arguments are getting lost in the howling of political debate, sadly.

"My personal view is that we are still ploughing on with not very well regulated or controlled economic development and we need to pull that back and look at the consequences."

He has written to a federal government inquiry into population growth urging a policy change to link growth with the potential damage that can be done to the environment.

Dr West's submission to the inquiry suggests the Government should have better control over immigration levels as well as population growth.

"What we are saying is that (immigration) should be taken into consideration. I don't think we are saying Zoos SA has a particular insight into the social political and legal issues around immigration," he said.

"That said, I think it is fairly clear that there are a lot of Australians who could be better - skilled and employed - so let's be more considered in how we do this (immigration)," he said.

"But that is not a political comment and certainly does not stray into the refugee issue."

Dr West said Zoos SA had spoken out because the population debate was subjected to extreme growth and anti-growth arguments and should be "evidence" based.

"Growth needs to be balanced with the environment and that is an important caveat that needs to be placed in people's minds," he said.

"We cannot continue to use up natural resources and have an impact on the environment without consequences, and they will directly affect not only biodiversity but ultimately our own quality of life.

"There is a debate about big Australia versus small Australia and we don't want to become politicised but we want to say that issues like this need to be very carefully approached."'

The Myth of Apathy

Reposted in full from Sustainable Life Media

'The conundrum

At this moment in time, there is no shortage of good ideas about how to make the world cleaner and greener.

We live in an era where there is an abundance of juicy good ideas, more awareness than ever about our ecological contexts. Information about the vastness of biodiversity, creatures in the deep seas and remote corners of this planet, the fragility of our home. Information about the threats. More information, period.

And yet, the riddle at the center of just about any sustainability effort (worth its salt) is why we are not taking action. Let’s be even more specific: actions that we know would have a good chance of mitigating some of the most severe threats facing our horizon, from climate change to overfishing to toxic contamination of air, water and dirt. Actions that we know from an ecological, economic, political and spiritual standpoint would do us all – plants, critters, humans – a lot of good. This has been referred alternately as the “gap” between values and behavior, or attitudes and actions. Is there actually a “gap” or is there maybe more of a “tangle” of confusion, emotions and desires?

The image of the moralizing environmentalist has been changing, as marketing agencies and corporations are cottoning on to the fact that if we make green sexy, hot, and profitable, more people will “buy” into it (pun intended). Green sells. Yet something fundamental may be glossed over. It is as if we can somehow suture together the rifts inherent in our consumptive-based way of life, and all that led us to this point (yes, all of it, from the first coal mines carved out of the British Isles to the present moment), and smooth it all into one lovely, profitable and seamless green dream.

While this vision is intensely appealing, it is psychologically problematic, emotionally confusing, and ideologically incoherent. Clinical psychology – the folks who work on the front lines with people and groups on a daily basis to effect change – knows that in fact we are always negotiating dilemmas and conflicting values and desires. It’s part of being human. And sustainability is no exception. The reason is that most of us are embedded in the very practices, desires, goods, textures and sensations that contribute to our ecological ills. And if we are not embedded, we are in contact in some way or another with the products of our industrial and post-industrial achievements. Psychologists refer to this state as “dissociation”– our capacities to both know and “not know” and split off our awareness so we can function normally.

Why does this matter for us, as we work hard to integrate sustainability at every level of our organizations, woven into the fabric of our branding and our culture? Because this paradox gets to the heart of why people may continue to do nothing to help save or protect our environment, despite our best wishes, hopes, desires and dreams to do so.

Being green is attractive, desirable and profitable. However – and it may be hard to accept this, particularly for those of us working hard on selling sustainability – it is also potentially frightening. Going green, if we really pay attention, is about how we construct meaning in our lives. Until we incorporate the whole picture – opportunity, innovation and creativity, as well as fear, anxieties or losses of cherished identities tied to consumptive (and wasteful) practices – into our vision of being sustainable, we are going to be fighting a battle. Flowing against a current. When in fact, we can be flowing with the current – if we can acknowledge paradoxes, contradictions, and dilemmas these topics can bring up.

What’s actually going on.

We are constantly reminded at how little the “public” seems to care about the most pressing ecological threats facing us, such as the latest Gallup poll in March 2010 indicating Americans' worries about environmental issues have hit a 20-year low. It can be very hard to know exactly what people feel and think about sustainability, and it is tempting to assume apathy is the status quo.

Apathy has become a term used to describe the disjuncture between the exigency of a situation (chronic, ecological threats) and adequate emotional, intellectual or physical response. We think of apathy as the central driver for public inaction in the face of serious issues, whether it is political injustice, ecological devastation or plain wrongness in the world. Apathy is a blanket term to describe what seems to almost defy description: the lack of pathos. From the Greek root apatheia, it means quite literally lack of interest, enthusiasm, or concern (OED, 2011). Apathy is perceived commonly as an “enemy” – of reform, political action, up-take. It can also be seen as shorthand for “selfish,” “ignorant” or “greedy” – attributes often ascribed to “the public” for not “doing enough” to protect our collective resources, fellow creatures and planet.

If we examine apathy as a viable descriptor for human experience and behavior, we may find some surprising implicit assumptions about humans. Such tacit assumptions also run throughout much of our communications and outreach strategies. They include the following:

If someone believes, feels or values something, there is a necessary correlative in their actions.

That we are aware of all of our thoughts, feelings, desires, fears, and conflicts at any given time and can adequately provide them on request (such as in a poll or survey).

Humans have the capacity to quite literally turn off their feelings, sensations or responses to the world around them.

The “public” is largely passive, and what is required are ever more ingenious communication strategies to mobilize, inspire, cajole, threaten, frighten or force specific actions.

What all of these assumptions have in common is a particular conception of human psychology: that we are largely rational beings who are self-determined, transparent to ourselves and to others, and with the right levers and motivators, can be enticed to take certain actions and avoid others. It’s a stunning image of human nature once you scratch the surface; and a pretty crude one. It shows up in our tendency to follow poll data and segmentation, as if we really can be placed into fixed and static boxes. It makes research easier, but how accurate is this really?

A more compelling and arguably accurate conception of human nature may be one that assumes contradiction, anxiety, ambivalence, paradox, and dilemmas. It assumes there may be huge reserves of care and concern, but complicated by a whole variety of pushes and pulls on our attention, identity, and investments. It takes onboard that with change, there is often loss. And with loss, there is often mourning and melancholia. And with grief and loss – when met adequately with support, there can be space for creative engagement, participation, care and concern.

It is our job to meet our customers where they are, and in order to, we need to have far better insight into what is actually going on for them. All the messy stuff.

It may seem entirely contrary to our mission to think about these aspects of human behavior. We want to focus on solutions and getting the job done: the bottom line. And my point is that if we don’t attend to these aspects our work will be harder. We will continuously trigger people in undesired ways, by speaking only to part of the picture. It’s our “affect” and emotional investments (often unconscious) that drive most decisions we make. Resources and guidance are available to us, but maybe not where we’d expect it.

Putting it into practice.

So what would it look like, if we were to take these ideas and put them into practice?

Rethinking research.We would design innovative methods for understanding what people are thinking, feeling and sensing with regard to our particular value offerings. Rather than relying on polls or surveys, we would partner and collaborate with those coming from clinically psychologically informed backgrounds to help us develop cutting edge methods, that yield rich insight into the dilemmas our customers may be experiencing; and how to then help them “cross over.”

Speaking the truth.Glossing over the challenges we face is at best patronizing, and at worst, damaging to our brand. What would branding look like if it was straight talking, and assumed customers may feel overwhelmed, and to build a healthier world? This simple shift in acknowledging dilemmas helps disarm the tendency to fill in the gaps in what we don’t say, undermining the power of our messaging.

Authenticity.A credible and authentic brand and voice is one that can tap into the emotional resonances of our clients. We currently do this; let’s just broaden the range a bit more. Climate change, nuclear contamination, massive oil spills and loss of species are scary and painful issues we all face. There is no branding that will undo that reality. Rather than stick a smiling face on everything, build a brand rooted in an authentic acknowledgement of both reality and the possibility.

Humans are by and large, truth-seeking creatures. We love the truth, it feels good to us when we sense and feel it. Let’s try branding that does not assume our clients are apathetic but rather may be a bit stuck. It’s our job to help them along, and one way is to build a branding and platform rooted in the messy complexity of what it means to be human, right now.

The Sharing Economy

"Business has spent centuries making buying really easy...we're just at the beginning of making sharing easy."

Reposted in full from The Fast Company, 18 April 2011

'It's 8:30 a.m. in Silicon Valley, and Neal Gorenflo is already busy sharing. Inside his Mountain View town house, just a few short blocks from the Caltrain station where commuters pour out each morning on their way to Google, Gorenflo hands over his 15-month-old son, Jake, to a nanny he shares with his neighbor. At a local coffee shop, he logs on to a peer-to-peer banking site called Lending Club to make a series of small loans to someone planning a wedding, another starting a pet business, and a guy named Pat who wants to move. After biking down to the station, he drags his ancient Peugeot onto the train to San Francisco, where he hops into a Prius he's reserved for a few hours from City CarShare, a not-for-profit version of Zipcar.

After driving out to Berkeley for a tour of a cohousing community, he finally lands at a shared office space in SoMa, from which he works once a week. "What typically happens is when people try one sharing behavior, then they start to think, What can I do next?" says the 47-year-old ex-equities analyst. "And those small changes ultimately lead to big changes."

Gorenflo does, of course, still own stuff. He owns his house and his laptop and his clothes and even that old Peugeot bike (Mountain View won't get a bike-sharing program till later this year). But the self-described "sharing hacker" has come a long way in a short time from his past existence as a corporate exec. In 2004, he was a strategist for a division of shipping giant DHL, splitting time between San Francisco and company headquarters in Brussels. The Up in the Air life was not for him - he started noticing that most thirtysomething expats in his office were divorced, and he worried that his relationship with Andrea, his girlfriend, might be headed for trouble. "Our mission statement at DHL was something like, 'To be the best box mover in the world,' " recalls Gorenflo, who resembles a compact Kris Kristofferson. "I thought, What am I doing?" One afternoon, after a jog through the parking lot of his Brussels hotel, he quit his job. Since then, Gorenflo has deconstructed every aspect of his personal and working life, "removing all the things that don't add value and concentrating on the things that deliver value." Andrea made the cut - she's now his wife. But the corporate life did not. In late 2009, he started Shareable, a not-for-profit web hub that provides individuals and groups with a playbook for how to build systems for sharing everything from baby food and housing to skills and solar panels.

"Business has spent centuries making buying really easy," says Gorenflo. "We're just at the beginning of making sharing easy."

Gorenflo is a leading proselytizer of a global trend to make sharing something far more economically significant than a primitive behavior taught in preschool. Spawned by a confluence of the economic crisis, environmental concerns, and the maturation of the social web, an entirely new generation of businesses is popping up. They enable the sharing of cars, clothes, couches, apartments, tools, meals, and even skills. The basic characteristic of these you-name-it sharing marketplaces is that they extract value out of the stuff we already have. Many of these sites depend on millennials disenchanted by the housing bubble and the banking crisis, or uninterested in traditional icons of success such as house or auto ownership. But the number of people who have quietly begun tapping in is impressive: Already, more than 3 million people from 235 countries have couch-surfed, while 2.2 million bike-sharing trips are taken each month. Contends Rachel Botsman, coauthor of the recently published What's Mine Is Yours: The Rise of Collaborative Consumption: "This could be as big as the Industrial Revolution in the way we think about ownership."

The evolution of the social web, explains Botsman, first enabled programmers to share code (Linux), then allowed people to share their lives (Facebook), and most recently encouraged creators to share their content (YouTube). "Now we're going into the fourth phase," says Botsman, "where people are saying, 'I can apply the same technology to share all kinds of assets offline, from the real world.' " The 33-year-old Brit, schooled at Oxford and Harvard, ditched her career as an innovation consultant for companies like GE and IBM. "In marketing, we spend so much money on research and understanding the consumer psyche -- and all that investment goes into selling more stuff," she explains. "I just can't help companies sell more stuff."

The central conceit of collaborative consumption is simple: Access to goods and skills is more important than ownership of them. Botsman divides this world into three neat buckets: first, product-service systems that facilitate the sharing or renting of a product (i.e., car sharing); second, redistribution markets, which enable the re-ownership of a product (i.e., Craigslist); and third, collaborative lifestyles in which assets and skills can be shared (i.e., coworking spaces). The benefits are hard to argue -- lower costs, less waste, and the creation of global communities with neighborly values.

The earliest of these marketplaces, like Freecycle and CouchSurfing, encouraged the exchange of goods among peers for free. But the latest sharing platforms are anchored in commerce. They have the potential to amass a new ecosystem of entrepreneurs, just as eBay once aggregated fragmented buyers and sellers into a global online marketplace. Gartner Group researchers estimate that the peer-to-peer financial-lending market will reach $5 billion by 2013. Frost & Sullivan projects that car-sharing revenues in North America alone will hit $3.3 billion by 2016. And Botsman says the consumer peer-to-peer rental market will become a $26 billion sector, and believes the sharing economy, in toto, is a $110 billion-plus market. "Is this purely a warm-and-fuzzy kind of thing?" says Ann Miura-Ko, a venture capitalist at Floodgate Fund who, along with partner Mike Maples (an early backer of Twitter and Digg), has invested in three sharing businesses. "It's not. As a venture capitalist, I'd never invest in something that's purely warm and fuzzy." In fact, in the past year, Google Ventures; Sequoia Capital; and Greylock Partners' Reid Hoffman, the cofounder and executive chairman of LinkedIn, have all backed "sharing" ventures. (Actually, Silicon Valley's preferred phrase is "underused asset utilization." As Howard Hartenbaum, general partner at August Capital, explains, "It's more obvious how you make money.")

Now that the sharing economy is gaining the backing of the financial community, corporations from car manufacturers to big-box retailers better start paying attention. "This has the potential to be lethally disruptive," says Umair Haque, an economist who recently published The New Capitalist Manifesto with Harvard Business Press. Sharing platforms won't bankrupt a company like Home Depot, says Haque, but they could eat away at its business. "If the people formerly known as consumers begin consuming 10% less and peering 10% more, the effect on margins of traditional corporations is going to be disproportionately greater," says Haque. "Which means certain industries have to rewire themselves, or prepare to sink into the quicksand of the past."

On a damp February evening in San Francisco, the founders of AirBnB -- one of the hottest startups in the sharing scene -- are reminiscing about the first strangers who slept on their apartment floor. "We had a 38-year-old female who worked at Razorfish. And then an industrial designer from Salt Lake City who was even older. They slept on an air mattress on our kitchen floor," says Joe Gebbia, AirBnB's hoodie-wearing head of user experience. Back in 2007, Gebbia and Brian Chesky were recent RISD graduates in need of extra cash to pay their rent. On a whim, they built a website offering attendees of a design conference a unique place to stay -- in their apartment, on those air mattresses, with a home-cooked breakfast. Says Gebbia of their houseguests, "They broke every assumption we ever made about who would stay on an air bed at a stranger's house." Encouraged, he and Chesky decided to try and build a business: a web platform where booking a room in a person's home anywhere in the world was as easy as booking a hotel room.

The challenge with building a marketplace is to ensure that there is both supply and demand. "It's a chicken-and-egg problem," says James Reinhart, cofounder of ThredUp, a venture-backed startup that helps people unload or swap children's clothing and toys -- the ultimate forced obsolescence -- by the box. An alum of Harvard Business School, Reinhart closely studied eBay, which in its early days helped create demand by making it free for anyone to list. "You have to pick which side to subsidize," says Reinhart. Like eBay, ThredUp started out by funding the supply -- the company bought hundreds of boxes of clothing before launch, so it could open up with inventory. ThredUp now gives users a credit every time they post a box of stuff their kids can no longer use. They can use the credit to acquire a box of goodies more in line with the current age of their children. Boxes that are unsold after two weeks are either given a fire-sale price or donated to charity. "The worst experience," he says, "is having a box of children's clothes to sell and nobody who wants it."

AirBnB, on the other hand, had to create demand. Gebbia and Chesky had no problem ginning up a marketplace when a major event occurred in a city with limited hotel space, like the 2008 Democratic National Convention in Denver. But when there was no urgency, business slowed to a trickle. As a result, Chesky and Gebbia put in a lot of time meeting AirBnB's early suppliers, spending the night at their homes, and organizing user meetups. They learned that people weren't willing to pay for a room they couldn't see, so Chesky and Gebbia insisted on beautiful wide-angle high-resolution photos. Early on, they placed an artificial cap on price, but they experimented with lifting it -- suddenly, hosts began renting out entire apartments, and the experiment became the norm. "Today, if you add up all of our listings in New York City, it's probably safe to say we're 10 times larger than any hotel," says CEO Chesky. "We're on almost every single block in the city."

AirBnB is now in more than 8,000 cities, and rents houses, castles, cars, yachts -- even igloos. "I knew within three minutes I would be very interested," says Greylock's Hoffman, who invested $7.1 million in AirBnB last April, several months after Sequoia Capital led a seed round. AirBnB -- growing at a staggering 45% average rate, month over month -- sees travel as but a first step. "If you look at it as the eBay for space," says Hoffman, "people have a massive amount of liquidity and economic value tied up in their space. The ability to parse that in different ways ... the sky's the limit." Unlike VRBO, which is limited to renting second homes, the future of AirBnB is not only in monetizing the houses, say the founders, but in monetizing all the stuff in houses, front yards, backyards, and driveways. "I only invest," says Hoffman, "when I think a company will be a multibillion-dollar company."

This is why sharing startups have piqued the attention of Sand Hill Road. "It has the potential to be really disruptive. Amazon came first, then eBay, and peer-to-peer is next. It's almost as far as you can get on the spectrum of goods exchanged," says Josh Felser, an investor at Freestyle Capital. In January, Craig Shapiro, former president of Good Worldwide, left the media company to start Collaborative Fund, a venture fund that will invest mostly in collaborative-consumption businesses. "I'm looking at virtually every resource and finding ways to extract additional value or productivity from it, from food to gardens to skill sharing," says Shapiro, whose investors include YouTube cofounder Chad Hurley, MIT Media Lab cocreator Nicholas Negroponte, and even Botsman.

Not every category is a natural for sharing. "Expensive electronics wouldn't work," says Punsri Abeywickrema, a former LinkedIn software engineer who founded an online rental company called Rentalic in 2008. Abeywickrema built the platform as a marketplace for rentals of everything from handbags to lawn mowers. But after nine months of user testing, he concluded that shareable objects had to fit specific criteria: They must cost more than $100 but less than $500, be easily transportable, and be infrequently used. As a result of his research, Abeywickrema has narrowed the site's scope to sporting goods and outdoor gear.

The challenge that worries everyone in the sharing world, of course, is trust. It's one thing to believe that a knitter on Etsy will mail you that crocheted beret. It's another to let a stranger sleep in your home or borrow your second-most-expensive asset, your car. "Sharing of the kind we're talking about really only works when there's reputation involved," says Freestyle's Felser. "We haven't seen any mass-market approach to combining distributed trust and sharing." Most sharing platforms try to combat this issue by building a self-policing community. Almost all (including AirBnB) require profiles for both parties and feature a community ratings system.

But these ratings would carry far more weight if they traveled with you across the web, so that your eBay reputation helped inform your standing on AirBnB. Startups like TrustCloud would like to become the portable reputation system for the web. The company is building an algorithm to collect (if you choose to opt in) your online "data exhaust" -- the trail you leave as you engage with others on Facebook, LinkedIn, Twitter, commentary-filled sites like TripAdvisor, and beyond -- and calculate your reliability, consistency, and responsiveness. The result would be a contextual badge you'd carry to any website, a trust rating similar to the credit rating you have in the offline world. "Sure, there's always the argument that anyone can be an ax murderer," concedes TrustCloud cofounder Xin Chung. "But you get a lot more indicators in data exhaust than you do in walking up to somebody in khakis and a crisp white shirt on the street. I'd pick the data exhaust any day."

Of course, there is one company that is already collecting a ton of that data exhaust on its own site: Facebook. "Think of sites like Yelp and eBay," says Carl Sjogreen, manager of Facebook's platform product team. "They invested a ton of resources for building a notion of reputation online, but all based on pseudonyms, like joebob77 on eBay. We decided early on to be a social-networking site based on your real identity with your real name." With more than 600 million registered users, 250 million people engaging with Facebook on external websites every month, and social plug-ins that are creeping into an estimated 10,000 new websites a day, Facebook has the potential to become the arbiter of online trust. "The incentive to be a good player in that ecosystem goes up dramatically when it's associated with my real identity," says Sjogreen, "because if someone leaves a bad review of me on AirBnB, that will carry with me to the rest of the web."

Last February, on the evening before the North American International Auto Show, in Detroit, Lisa Gansky gave a TEDx talk to an audience of some 300 people in the Fisher Theatre, including designers from brands such as Ford and Lincoln. She asked the crowd what percentage of time the average person uses his car. While a couple of folks mumbled a guess, no one was prepared for the statistic Gansky had at hand. "Across the U.S., Canada, and Western Europe, it's 8%," she said. "Which means that over 90% of the time, this thing that costs us a lot of money is just sitting around."

Gansky had been invited to explain "the mesh," a concept she coined in her book by the same name, which was published last September (as was Botsman's). Both authors believe the development of this mesh of shared things will affect not only the way we consume but also the way successful companies will be built. Gansky, a tech entrepreneur who made tens of millions of dollars selling startups to AOL and Kodak, thinks this means that the car companies must start behaving like a platform. "It would be really great," Gansky told her audience, "if any moment now, you guys could start rolling share-ready cars off the assembly line."

Cars are the ultimate expensive underutilized commodity. Eleven years ago, Zipcar started convincing urbanites that they could shun car ownership and enjoy the perks of access without any expense or inconvenience. Zipcar is now getting ready for its IPO. But a slew of new venture-backed car-sharing and ride-sharing startups have recently emerged, and their business model might be more efficient than Zipcar's. Zipcar, which has yet to turn a profit, is saddled by the expansion and maintenance of its fleet, a cost that now clocks in at more than $90 million. Platforms like RelayRides, Zimride, Spride, and Getaround don't own any cars -- they simply enable the sharing of autos owned by individuals.

The economic incentive to share your second-most-valuable asset with a stranger may be compelling. "The average person using RelayRides makes $250 a month renting," says Shelby Clark, founder of RelayRides, which is backed by August Capital and Google Ventures. "Some users are making enough on RelayRides that it's offsetting their entire car payment. They're basically getting a free car." And since RelayRides has a $1 million insurance policy covering both sides during each reservation, it's low risk.

And then there are the noneconomic benefits. Clark says that when people's mobility costs shift from being fixed (ownership) to variable (renting), they make more efficient decisions about when they actually need to drive. "Studies have shown," says Clark, "that the average car sharer drives 40% less than the average owner." Shareable's Gorenflo believes this makes car sharing the "gateway drug" to other types of sharing. "Historically, cars were the vehicle into hyperconsumption," says Gorenflo. "It looks like they could be the vehicle out of it too."

Car manufacturers are starting to pay attention. In early 2010, Peugeot rolled out a mobility rental service called Mu. A membership gives people access to not only customizable Peugeot cars (fitted with bike racks, snow tires, and TVs) but also to electric scooters and bikes. "In the biggest cities in Europe, we see people giving up ownership of the car to switch to sheer usage," says Peugeot's Nadège Faul. By the end of 2011, Mu will expand from six cities to 70. "We are convinced it's a new age of car manufacturing," she says. "Either we take care of it and recognize this new market or we might just as well lose these consumers for good."

German car manufacturer Daimler is taking this new reality even more seriously. Its Car2Go service is similar to Zipcar's, except that it doesn't require a reservation or a two-way trip. Car2Go's mobile app allows a person walking down the street in Ulm, Germany, or Austin (its two pilot cities), to locate a Smart car on that block, access it immediately via a windshield card reader and PIN number, drive it anywhere locally, and leave it there for someone else to use. The fuel-efficient Smart car has a 100-watt solar roof, which powers the car's telematics and its battery. "According to a Frost & Sullivan study from 2010," says Car2Go managing director Robert Henrich, "the revenue in the car-sharing market will soon be in the billions. This is the order of magnitude we are looking at." Henrich will begin commercializing Car2Go this year, with plans to expand to 100 cities in the U.S. and Europe.

Daimler is investing so much in this market that it has started developing apps that work for any car - not just a Daimler-made vehicle. Last September, Daimler's innovation group in Germany started piloting Car2Gether, which offers an app to match local drivers with people looking for a ride. Riders submit a request to a driver - who can be driving any kind of car, not just a Daimler - and both profiles are linked to their Facebook pages and Twitter feeds. After the ride, both driver and passenger rate each other. "We want to make this a social network on wheels," says Michael Kuhn, project manager of Car2Gether, who doesn't even know if Daimler will - or can -commercialize the service. "It's all about access trumps ownership," says Kuhn, sounding far more Silicon Valley than Stuttgart, Germany.

The carmaker realizes that sharing systems are going to be created whether it joins the party or not. "If you don't build a value cycle," says economist Haque, "one will be self-organized. And it will commoditize you." Whether it's moms opting to buy baby clothes from other moms through ThredUp rather than visiting Baby Gap, or neighbors borrowing a drill through NeighborGoods instead of going to Target, consumers - or, perhaps more appropriately, citizens - are being connected in a way that cuts out the corporate middleman. "We often think about this stuff purely as secondary markets," says Haque, "but I think there's a deeper truth here, which is we're learning we don't have to obey these industrial rules of producer versus consumer. We can take the stuff we have and cycle it."

The sharing economy is at one of those interesting junctures where no one knows how big it might get or how many industries and companies it might affect. Best Buy and Lowe's, to cite two relatively unlikely candidates, have started to contemplate how it might impact retail. "I would say this notion of sharing is something we've been talking about in the last 12 months," says Lowe's VP of new business development Jay Rebello. "Social networking is impacting the definition of what a community is, and, in the past, people wanted to accumulate more stuff. More recently, we're seeing people view that differently." And in sectors like banking, where Wall Street's behavior has led to immense consumer distrust, disintermediation via sharing is becoming a reality. "We benefited enormously from the banking crisis," says Giles Andres, CEO of Zopa, one of the several peer-to-peer lending sites, like Lending Club, that have emerged over the past several years. "That was the catalyst for going from early adopters to a more mass-market crowd."

"I think P-to-P banking is going to be hugely disruptive to the banking industry," says Haque. He may be right. Still, it's hard to envision a big peer-to-peer market in $1 million mortgages, for example. As he himself says, "The finance guys are proficient on maintaining their stranglehold on the status quo, trying to convince us that without them we'll fall apart." But Haque's faith is based on the principle that's at the very heart of the new sharing economy: the resilience of distributed systems. He offers as parable the way that villages and communities survived the Irish banking crisis of the late '70s, during which bankers - yes, bankers - went on strike. They warned the public that the economy would collapse without a banking system. "What happened instead," says Haque, "was a P-to-P banking system emerged out of nowhere. The local pubs became the de facto banks, lending money to their customers. If you think about it, who is a better judge of character in Ireland than the bartender?"

He laughs. "The economy did not stop growing -- it didn't even falter."'