Environmental Business tends to be regarded as an industrial sector of market economy. However, the mainstream of Environmental Business does not exist in market economy, but in the third sector of community-based organizations, which is different from economies of private enterprises and governments. In fact, this trend is emerging in various parts of the world.
The community-based third sector, which consists of non-profit-organizations (NPOs) or cooperatives etc., builds "Reciprocal Economy", interacting with "Exchange Economy" of markets and with "Redistribution Economy" of governments. It is difficult to find solutions in a simple framework of market or government; market has "market failure" and government has "government failure", and expectation for the third sector is rising.
The third sector has a long history, but since 1990s it is changing its nature. Organizations that has incorporated the concept of "Social Enterprise" started to appear in the area of welfare. The third sector is developing a new stage.
On the other hand, market economy has tried to correct market failure and internalize external diseconomy, and started to support the third sector through partnerships as a developed activity of Corporate Social Responsibility (CSR). Governments are promoting new public management and outsourcing businesses to private enterprise and the third sector.
This paper firstly tries to connect ecological movements that started around 1970 and social enterprise that is emerging since 1990s. Secondly, it examines the situation of environmental business by social enterprise by selecting Japan as a country for analysis. As one-village one-product movement of Japan has widespread into developing countries in the world, community-based environmental business in Japan is also expected to be a good reference to the world. Lastly, the paper overviews policy agenda for promoting community-based environmental business.
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