The IPCW system is complex. Highlighting three sub-cycles in the system makes it easier to understand.

2.2.1 The Production and Consumption Cycle

Current sustainable production and sustainable consumption programs target the production and consumption cycle. As consumers purchase goods and services, they influence what manufacturers create. As manufacturers produce new products and advertise to the public, they attempt to create or shape consumer demand.

This cycle can be influenced by actions that influence both consumers and producers, including:

	making sustainable products cheaper and unsustainable products more expensive (through pollution taxes, for example),
	promoting efficient production methods,
	working with (or legally compelling) manufacturers to phase out unsustainable products, and
	educating consumers (e.g., product labeling).

2.2.2 The Investment Cycle

Investors supply capital to projects that they believe will give them a good return on their investment. These projects then interact with the production/consumption cycle, and if successful, return profits on the original investment.

In the natural capitalism model, natural resources are part of the capital invested in projects. Their associated costs needs to be internalized and their value incorporated into accounting methodologies. As such, reinvesting in natural capital should be a matter of course.⁹

The investment cycle can be influenced by actions including:

	investment incentives,
	investor education,
	calculation and inclusion of currently externalized costs,
	making sustainability performance visible (using tools like the Global Reporting Initiative),
	risk assessments and valuation methods, and
	differential taxation (feebates) that reward sustainable projects and penalize unsustainable projects.

2.2.3 The Waste/By-product Cycle

In the waste cycle, natural resources are used in production to make goods (and waste). Goods are then consumed, causing more waste.

Conventional consumption and production both generate waste, which leads to an ever-increasing demand for natural resources and an increase in pollution. In contrast, sustainable production and consumption systems produce very little waste. Often they convert some "waste" streams into marketable by-products and reinsert them back into the system.

The waste cycle can be influenced by sustainable production and consumption, including:

	clean and efficient production methods,
	encouraging products and services designed for reuse and recycling, and
	prevention of externalization of waste removal, handling, and storage costs.

Most current interventions focus on one of these three cycles in isolation. However, whole-systems thinking suggests that a more unified approach may produce significantly better results.

2.3 Whole-Systems Thinking

2.3.1 The Whole-systems Approach

The two Global Status 2002 reports each call repeatedly for new conceptual schemata to move beyond current approaches. Individually, today’s global, national, and local interventions are not producing adequate progress towards sustainability. Interventions are often made without support from a comprehensive whole-systems model, and without sufficiently accurate system metrics for feedback.

Whole-systems thinking recognizes that a problem is created by every part of the system in which the problem is embedded, and that the problem can be addressed in any and every part of the system.

This approach focuses on interactions between the elements of a system as a way to understand and change the system itself. Whole-systems thinking pays close attention to incentives and feedback loops within a system as ways to change how a system behaves.¹⁰

Whole-systems thinkers see wholes instead of parts, interrelationships and patterns, rather than individual things and static snapshots. They seek solutions that simultaneously address multiple problems.¹¹

Respected whole-systems theorist Donella H. Meadows lists nine places to intervene in a system, in increasing order of impact: numbers (subsidies, taxes, standards), material stocks and flows, regulating negative feedback loops, driving positive feedback loops, information flows, the rules of the system (incentives, punishment, constraints), the power of self-organization, the goals of the system, and the mindset or paradigm out of which the goals, rules, and feedback structures arise.¹² In Meadow’s hierarchy, altering numbers—adding five percent more money to a program budget, reducing unemployment by half a percent—are the least effective form of intervention. Altering mindsets—traditional industrialization leads to prosperity, waste is inevitable, centralized projects mean progress—is the most effective form of intervention. Effective change means tinkering with intervention strategies and parts of the system until something works.¹³

Whole-systems thinking can produce effects that would be unattainable with more linear approaches because it is often a closer fit to the reality of the situation. Two examples, from architecture and agriculture, showcase the benefits of whole-systems approaches.

2.3.2 Green Buildings

Green building techniques successfully deliver better buildings with lower construction costs, fewer natural resource demands, and lower operating costs by understanding the whole system in which a building operates.

Traditionally, when making a decision about how much to invest in energy-efficient building technologies or how fuel-efficient a car should be, we automatically assume incremental levels of savings for our efforts. One should install extra insulation in a house, the reasoning goes, until the cost per extra fraction of an inch of extra thickness is equal, but not more than, the extra savings on the heating bill. While this is common thinking, this reasoning ignores whole-systems thinking.

For example, a PG&E demonstration building in Davis, California contains neither a furnace nor an air conditioning system in a climate where summer temperatures sometimes reach 45 Celsius. The creators designed away the need for active temperature control systems by combining improvements in the key components of the house—shell insulation, thermal mass, and internal appliances. Double-thick insulation and super-efficient windows prevent unwanted heat from entering the house; efficient lights and appliances release very little heat inside; and double drywalls create sufficient thermal mass to store coolness through the hottest part of the day. Whole-systems thinking yielded energy savings and passive cooling far in excess of what any single improvement could have achieved on its own.

With furnace and air conditioning gone, the need for associated infrastructure such as ductwork, pipes, controls, and wiring were also drastically reduced, creating more space for people inside the building. Beyond the lack of heating and cooling machinery, energy-efficiency measures reduced the energy demands of space conditioning, water heating, lighting, and refrigeration energy by 75% compared to a conventional home. Greater up-front costs for some components of the building quickly paid for themselves with "big savings that were cheaper than little ones."¹⁴

2.3.3 Integrated Pest Management

Integrated Pest Management (IPM) is an outstandingly successful application of whole-systems, life-cycle-based thinking to a practical problem: controlling (mainly agricultural) pest populations. Although IPM was once a radical departure from the then-standard "spray-and-pray" approach to pest control (i.e., apply pesticides and hope for population reduction), its successes have brought it to the mainstream.¹⁵

IPM operates by building a detailed understanding of the system in which pests appear, by:

	understanding the whole life cycle of the pest species in question, including what supports the population, reproductive cycles, and points in the life cycle where populations can be reduced by an intervention,
	monitoring the pest populations at every stage of the life cycle, and
	precisely defining population levels at which pest populations require action.

By applying a system that includes metrics and a life-cycle model, many small, strategic interventions can cumulatively result in excellent pest control. Successful IPM reduces the problem at every stage of its life cycle so that threshold pest populations simply never appear. The individual interventions of an integrated pest management system are ineffective on their own. IPM works because it uses these individual interventions in response to carefully measured feedback from the system it seeks to change. If one intervention is less effective than anticipated, the other interventions in the system are increased in intensity or new interventions are introduced until the system is back on track.

While whole-systems thinking does not automatically yield sustainable production and consumption systems, sustainability cannot be achieved in the absence of whole-systems thinking. An environmental health and safety employee charged with enforcing hazardous waste disposal regulations, but otherwise given no authority, will rarely be able to enact innovative and cost-saving ways of eliminating hazardous waste on the front end. An engineer tasked with cooling a building after the architect has drawn the final floor plans will not be able to suggest changes to lighting systems, aspect, or materials that could reduce the size of the HVAC system or eliminate it altogether. The farmer constrained by market demand may not be able to choose to cultivate a variety of crops, remaining chained to a pesticide-dependent monoculture.

Action on conventional models of sustainable production and consumption tends to emphasize interventions at the production and consumption stages of the cycle. To be effective, however, interventions must be considered for every stage.

The programs outlined below suggest multiple intervention points in the areas of Systems Thinking, Green Design, and Regional Development.

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