Green Valley: Can Vermont turn a legacy into gold?, The

Vermont Business Magazine, Jun 01, 2004 by Kelley, Kevin

The Vermont name evokes special feelings. Vermont is associated with a clean rural environment and sturdy craftsmen."

The source of that quote could be any one of the state's many economic promoters, including those now touting Vermont as a "Green Valley." Their aim is to identify Vermont with environmental technology in much the same way that California's Silicon Valley became synonymous with information technology.

Vermont is already home to several companies specializing in goods or services intended to abate or prevent pollution, backers of the Green. Valley initiative point out.

And along with Vermont's environmentally-friendly image, these boosters add, the existing firms could help attract similar companies from the flatlands, while also fostering home-grown start-ups.

Many outsiders, at least in the northeastern United States, do view Vermont -as a state populated by green-minded entrepreneurs and innovators. For example, it was The Providence Journal that noted Vermont's association with, a clean environment and sturdy craftsmen. The Rhode Island daily made that observation in a May 11 editorial that endorsed the logic of marketing Vermont nationally and globally as the Green Valley.

Lieutenant Governor Brian Dubie conceived of the Green Valley project and has become its chief promoter.

"Vermont is a brand," Dubie says. "This initiative is about leveraging the brand."

He says the Green Valley concept emerged in discussions with Vermont business executives on the long flight home from a marketing trip to China late last year. That country's enormous market offers unmatched opportunities for Vermont businesses, Dubie notes.

En route to the United States, the Vermont, business prospectors talked about how best to match what the state sells with what China wants to buy.

Environmental products and technologies seemed an especially promising avenue to the Vermonters.

"That flight was like an incubator for the. Green Valley," Dubie recalls.

Central to Dubie's strategy is an effort to tap public pension funds to help finance the growth and recruitment of environmental technology companies. Each of the state's three retirement systems - covering public school teachers and state and municipal employees - makes provision for devoting 2 percent of its total funds to so-called alternative investments.

As a result, Dubie says, up to $48 million of the $2.4 billion in Vermont's public pension funds could be used to develop the Green Valley sector.

"We're looking to create a vortex effect," Dubie explains. "You attract capital, adopt policies, build a culture, and the whole thing just reinforces itself."

State Treasurer Jeb Spaulding, who oversees the pension funds, expresses enthusiasm for Dubie's initiative. But Spaulding notes that the planning is at an early stage, and he cautions that decisions on investments are not made unilaterally by the state Treasurer but by the boards of the three funds, which consist of current and retired employees as well as other Vermont government officials.

In addition, the Green Valley proposal is not the only potential recipient of alternative investments by the pension funds, Spaulding points out. He says that affordable housing and other avenues of economic development will also be considered in deciding where to invest the available money.

The boards of the pension funds are likely to weigh their options carefully, with a view toward maximizing returns and not just investing in worthy causes.

"This isn't a grants program," Spaulding points put.

He notes that a small portion of the $48 million was invested about 10 years ago in Vermont-based venture capital initiatives. While it's not yet clear whether the funds will actually lose money on those investments, "they haven't paid off as much as was hoped," Spaulding says.

What's certain, he adds, is that the funds would not sink large sums of money into any single entity. It would also be "highly unusual" for the pension boards to approve direct investments in particular companies. A more likely choice, Spaulding says, would be to provide some seed capital for a Green Valley venture fund.

Discussions concerning specific funding mechanisms will become more focused over the summer, according to both Spaulding and Dubie. And while this particular route does not look likely to lead to results anytime soon, the Green Valley's sponsors say they're confident that capital will eventually be found. What's being sought, says Peter Murray, president of the Vermont Environmental Consortium, is a "green bucket" that can deliver sustaining resources.

Dubie says his initiative is designed to help reconcile the often-conflicting alms of economic development and environmental protection. The Republican lieutenant governor recalls that while in China he heard the saying, "Same bed, different dreams," which he took to mean that discord can develop even among people with shared interests.

Vermont can thus be viewed, Dubie suggests, as a bed in which developers and environmentalists dream differently about what's best for the state.