The Why Files The Why Files -- whyfiles.org

Sustainable development for the "base of the pyramid"?
POSTED 15 NOVEMBER 2007


Dark night sheds light on new path to sustainable development
Could the pitch-black villages and shantytowns of the developing world present an opportunity to alleviate poverty, improve education, goose green technology, save some energy, and create jobs -- all in one package?

Count us as skeptics: We aren't buying pie-in-the-sky this week.

Yet consider the Light Up the World Foundation, a Canadian non-profit that has wedded cutting-edge electronics to solar electric Smiling children raise their hands in the air behind small wooden deskspanels in the service of a radically simple idea: safe, healthy lighting for people who are at the "base of the pyramid," economically speaking. (BOP is the trendy term for the 3 to 4 billion people who are either real poor or kind of poor.)

Children at an orphanage in Tibet, located 14,500 feet above sea level. The orphanage is presently lit with a few fluorescent lights powered by an expensive, unreliable generator. Photo: Yushu Tibetan Autonomous Prefecture, Qinghai Province, China, courtesy Light Up the World Foundation

Aren't these tomorrow-tech lights expensive? Not really. Light Up the World says an installed system costs about $150 -- less than many families beyond the reach of electric wires now spend in a year to light the night with batteries, candles and kerosene.

David Irvine-Halliday hatched the solar LED idea back in 1997, after seeing dirt-poor families in Nepal spend a large fraction of their pitiful income on kerosene -- a flammable, toxic and polluting liquid that must be lugged by foot across the Himalayan mountains.

Dismal lighting, Irvine-Halliday saw, was a serious impediment to schoolwork and household chores.

And he realized that the cost of poor lighting was much more than the expense of candles or kerosene. Poor lighting could hamper a kid's education. It could cause lung disease or serious burns.

Five columned table demonstrates efficiency of LEDs.  After 50,000 hours, an LED system costs 0.2 percent of a kerosene lamp, and one-quarter of a compact fluorescent

The quality, reliability and efficiency of light-emitting diodes have zoomed since they were invented in the 1960s. New LEDs can shine continuously for 100,000 hours, or 30 to 40 years (!) in normal service. Lumens measure light output; the efficiency of white LEDs, measured in lumens per watt, is steadily rising. LEDs from Light Up the World have been powered by pedal-powered generators and tiny wind turbines, but photovoltaic panels are the most common source of electricity. Graph: Light Up the World Foundation

The dark side
Irvine-Halliday, a professor of electrical engineering at the University of Calgary (Alberta), figured there must be a better way, and quickly arrived at light-emitting diodes (LEDs), an emerging technology that can convert electricity into light with extreme efficiency. He also settled on the obvious power source: small photovoltaic panels, which make electricity directly from the sun. He would use batteries to store electricity generated during the day for use at night.

For a few years, he and his wife maxed out their credit cards buying components and assembling solar-powered LED lighting systems.

The family, and then Light Up the World Foundation, started by donating lighting systems to families in the third world. More than 20,000 families in 42 countries are using the systems now, says Irvine-Halliday.

Grass green plastic piece has electric wires and microchips on its face, small diode in centerBut donations can never help billions of potential beneficiaries, and the new approach is to sell the systems to people who usually pay with the proceeds of a microcredit loan.

The white LED at the center is surrounded by electronics that control its power consumption. Image: Light Up the World Foundation

LED and solar technology are improving almost every year, and the price is dropping, so the real problem is finding a "business model" that can enable broad distribution. One obvious possibility is to inspire businesses to manufacture and install the solar LEDs.

The economics make sense, Irvine-Halliday says; his data show that poor people already spend plenty on lighting. "There is no question that people in many countries are paying more in one year for kerosene or candles than the one-time cost of a system."

You can't really appreciate the importance of light if you've never relied on cheap flashlights or stinky kerosene in a dark village or shantytown. To give us a picture, Irvine-Halliday recalls demonstrating a light to an Afghani woman who was helping a group of women in the embroidery business. "It was dark, and I showed her this 1-watt lamp," he says. "She shook her head and did not say anything for 30 seconds. I was wondering if something was wrong, when she said, 'These women will think this is a miracle! I had no idea you could get so much useful light from a lamp.'"

The basis for comparison, of course, was the yellow glow of kerosene lamps that the women were using to illuminate their painstaking work.

Woman with lined face and expressive eyes wears a faded red turbanIndividuals at the "base of the economic pyramid" may have little money to spend, but their aggregate spending is massive. Can meeting their needs also address problems of poverty and environmental destruction? Photo: Light Up the World Foundation

Getting to first base
Moreover, not only are kerosene and candles barely adequate for reading or detailed work, but the LED systems also eliminate the problems of indoor air pollution, burns and fires. As for flashlight batteries, we all know how long they last...

But even if the solar-powered LEDs can help with homework and making money at night, do they really support the twin goals of sustainable development: alleviating poverty and succoring the environment?

For the answer, meet Stuart Hart, a professor of business at Cornell University who is a leading proponent of the idea that capitalism should address the needs of the world's common people, not just its elites. Hart says those LEDs can indeed ease the four-way collision between poverty, population growth, economic expansion and environmental limits.

Since the idea of sustainable development was bruited about 15 years ago, negative trends have accelerated, Hart says. "It took all of human history, up to the American revolution, for population to reach 1 billion, and in my lifetime, it went from 2.5 billion to 6.7 billion -- in the blink of eye. Nothing like that has happened in the history of the planet."

People at the base of the pyramid are the key to commercializing tomorrow's clean technology, because they so often are poorly served, exploited. They pay a lot of money for bad service. There is a huge opportunity to create new technologies.But pollution, global warming and declining biodiversity are only half of the sustainable-development equation, he says. The other side is the need to reduce poverty. "Two-thirds of people make less than $3 a day," says Hart. "This is inherently unsustainable; it cannot last; it causes frustration, alienation, civil strife and ultimately collapse, both on the human and environmental fronts."

Without economic growth, most economists warn that poverty will only increase, yet as India and China grow their way out of poverty, their use of fossil fuels is adding to the existing problem of greenhouse gases, and the scientific predictions about the coming global warming are growing increasingly ominous.

Time is short, Hart told a seminar at the University of Wisconsin-Madison School of Business. "The decisions we take, the strategies we use over the next decade will tell the story" in deciding whether humanity will cause irreparable harm to the planet or find a sustainable course for the economy. "I think human society stands at a crossroads; we live at a point in human history that is like no other."

Gov: What, me worry?
Hart, author of Capitalism at the Crossroads (see #1 in the bibliography), does not see governments coming to the rescue. "The problems are global scale. It is inherently difficult for national governments, which are consumed with narrow self-interest, to deal with anything like this from an enlightened position. Global governance is in its infancy, and it's difficult to see how that would pull us out in time."

And what is left to solve the sustainability development riddle? Business. "This is not where I came from 30 years ago," admits Hart. "I thought corporations were the enemy. Now I think the best sector is the enterprise sector as a catalyst to move us through."

Specifically, Hart suggests that business can do well by doing good by focusing on the people who are doing poorly in the current economic system -- on the base of the pyramid (also called the "bottom of the pyramid").

Rather than market enhancements on the same old junk to rich people who are already overwhelmed with stuff, Hart suggests inventing affordable (and ideally, green) solutions to the many real problems faced by people with little money. For reasons we'll explain shortly, Hart thinks poor people who now use antiquated technologies are an ideal market for high-tech products with simultaneously environmental, social and economic benefits.Small boy walks on red clay road with a basket full of fish on his head

Another face from the 4 billion people in the base of the pyramid. Photo: Light Up the World Foundation

Seeing the light
And the prime example of a win-win-win solution is the solar-powered LEDs, Hart says. "This is a perfect example of leapfrogging to next-generation technology."

In developed countries where cheap electricity is available from the utilities, there is almost no incentive to switch to LED lights, despite their phenomenal efficiency and durability. It's not just a question of cost: LEDs require a different fixture, and make a color of light that is quite unlike what we get from familiar incandescent and fluorescent bulbs.

But each of these hurdles is irrelevant in developing countries, where the utility grid is absent and the "competition" consists of candles, kerosene lamps or flashlights.

According to standard economic theory, we have a demand, and an affordable supply, so all we need to do is stand aside and let the free market work its magic.

Problem solved? Not quite.

Those who think about the base of the pyramid say that most poor people are beyond fair markets, much to the detriment of both the planet and billions of individuals. But Hart says intelligent, responsible marketing to the base of the pyramid could make all the difference. "This is about getting to the two-thirds of people who have been ignored, bypassed, or damaged by globalization, to figure out a way to include them. If capitalism cannot become inclusive, and leap to the next generation of clean technology to reduce the human footprint and maybe regenerate the damage we have already done, it is difficult to see how we can avert a collapse."

How big is the base of the pyramid?

more


Megan Anderson, project assistant; Terry Devitt, editor; S.V. Medaris, designer/illustrator; David Tenenbaum, feature writer; Amy Toburen, content development executive

©2019, University of Wisconsin, Board of Regents.