Rules and Choices for a Sustainable Local Economy

Economies are social systems within which we make choices based on needs, wants, and means. People regulate economies through rules that set taxes, tariffs, fees, standards, licensure, certification, patents, etc. These rules reflect the priorities of the people who enact them through their governance structures be they for small local groups or large global agencies.

The intent of rules is to limit choices in favor of those that produce the desired behavioral outcomes on a consistent basis. Such rules make the economic system more effective (do the right thing) and efficient (do it the right way).

Oftentimes, rules from multiple levels of jurisdiction apply to the same set of choices. For example, cooperatives, municipalities, county, state, and federal offices and agencies, the European Union, the United Nations, professional societies, industry-wide private sector groups all have a hand in defining various regulations to monitor and manage the supply of basic needs such as food, water, energy, fuel, manufactured goods, etc.

Unfortunately, competing or unclear interests behind the rules or insufficient diplomatic moxie to enforce them results in a complex legal and financial landscape in which to make choices. From a business perspective, this dense web of rules becomes a barrier to entry for all but those that have a global market, deep pockets, and easy access to resources to sort through the alternatives, invest in the opportunities, and pay the consequences for any misstep. It also fosters a dependency by people and their communities, neighborhoods, and rural areas on global players to supply them with basic needs. This places communities at risk for survival if supply chains are disrupted whether by natural disasters, climate change, pandemics, fossil fuel shortages, political turmoil, even a down Internet, to mention some of the more obvious.

As explored in the posting, “Business Models for a Local Economy,” the primary purpose of a local economy is to meet the needs of its participants whereas the purpose of the global economy is to satisfy their wants. Such distinctly different purposes result in different rule sets. Governance structures proliferate at all levels to administer rules of the global economy. Far fewer are in place for local economies. However, several types are available. Among these are policy councils, buying clubs, and co-ops for food, family, education, housing, etc.

Governance structures for local economies establish the rules by which members of communities, neighborhoods, and rural areas have more options available so they can choose to meet their needs through local sources. In effect, such “rules management” facilitates “Business Model Development within a Local Economy”, which drives two fundamental “localization” processes:

  • Integration across all value-added steps from the point of consumption back to the points of production
  • Utilization of community assets and resources without reliance on outside funding

The combination of these two processes, under the auspices of a local governance structure, gives interdependent local businesses and support organizations the competitive edge to prevail over their global counterparts when meeting needs of community members. Furthermore, members have opportunities to minimize economic leakage, reinvest their assets, and retain vital resources in the community through an effective portfolio management effort. This collective effort, then, is the foundation for sustainable local economic development.

The diagram below offers another way to view these critical interrelationships.

The integration of value-add steps–a function of rules management–flows from the point of consumption to the points of production, whereas the utilization of community assets and resources–a function of asset management–flows from identification and location to inclusion in an infrastructure project and business case portfolio.

The center of the diagram lists a wide range of professional services required to accomplish the tasks and complete the activities associated with rules management, business ecosystem functionality, and asset management. Social networking and innovation, which characterize asset management, and entrepreneurship and commercialization, which result from rules management, form the backdrop to conduct these transactions.

As the graphic suggests, services are transactions–the lifeblood in social system behavior. Nothing gets done between and among people without transactions. However, some methods and processes require fewer transactions than others. Furthermore, a healthy local economy incurs fewer transaction costs, either internal or external, to meet the needs of its members than a global economy. This is simply because the sustainability of the community is in the hands of those who live there. It’s in their vested interest to manage it. And given the choice to do so, which a vibrant local economy does, members will act on behalf of their collective sustainability.

Community members, represented by the orange-colored background, have the rules in hand to manage the context and the choices available by which they can:

  • Meet their needs
  • Sustain their community for generations to come
  • Assure themselves of a reasonable quality of life
  • Build on a firm foundation to participate, successfully, in the global economy

These outcomes of constitute the primary purpose for a sustainable local economy and the healthy development it catalyzes and encourages.

Originally posted to Sustainable Local Economic Development on Tumblr by Steve Bosserman on Wednesday, September 8, 2010

Metrics for Local Economic Sustainability

Business models within a local economy engage community members, focus on meeting the physiological and safety needs of members, integrate across value-added steps, utilize community assets and resources , and apply output and performance metrics so that community members can keep score.

Although listed last, the significance of applied metrics cannot be overstated since it is through them the functionality, impact, and cost of the organization or cluster of organizations built upon the business model are measured. However, carefully crafted metrics have the capability to expand the business model beyond its basic purpose to drive solvency and sustainability of an organization or cluster of organizations to deepen the resolve to establish a fully functioning local economy, spur creativity and innovation to find business solutions, increase the rate and degree of adaptiveness, and significantly improve the odds of long-term sustainability for the community-at-large. The quality of the metrics, e.g., the relevance of the scorecard, within the framework of a local economy, shape the design of a business model so that the performance of the organization or cluster of organizations achieves these broader objectives. What are these metrics, then?

The graphic below builds on the basic flows of assets and work functions introduced in the posting, “Does Your Community Meet the Needs of Its Members?” The spreadsheet table superimposes traditional and alternative measurement systems across the two flows in order to motivate, track, and compensate progress. These complement the output metrics already identified in the posting.

The interplay between these two systems of metrics is the engine that strengthens and sustains a local economy. Let’s start with output metrics. The purpose of a local economy is to meet the needs, e.g., food, water, energy, housing, etc., of people within a given community, neighborhood, or rural area. The success of a local economy in delivering these needs to local points of consumption is determined by output metrics. For instance, food can be measured in calories, water in gallons, energy in kilowatts, housing in livable units, and so on.

These same output metrics apply to the work functions associated with delivery of a specific need. For example, food preparation, food processing, and food production provide calories, water recycling yields gallons of potable water, deconstruction and repurposing result in units of usable materials, parts, and components, etc. The more efficient these work functions, the more effective they are in delivering needs and the more sustainable the local economy. How to manage and improve work function operations, then, is of considerable importance.

Work functions or work modules are not independent of one another. They are highly integrated value-add steps that span from the point of consumption to the points of production. The key to managing and improving their operation rests in increasing the degree of integration among them. This requires a highly collaborative effort among those who are responsible for carrying out the tasks associated with each step whether they do so under the auspices of separate businesses or support organizations. For this reason, there is a direct association among the roles community members play: holders of the output metric scorecard; “owners” of the work functions; and leaders of work function integration into clusters of for-profit and support entities in their local areas.

Whereas independent agents dominate the play in the global economy, collective responsibility and leadership for meeting community needs rule the day in a sustainable local economy. The challenge is to match the assets and resources in the community with the work function clusters so they have the wherewithal to deliver according to the desired output metrics. The purpose of the community investment portfolio is to match infrastructure projects and work function clusters with assets and resources such that community members are confident the results will justify their investment. Performance metrics through multiple mediums of exchange indicate how well this match is made.

The posting, “Business Model Development within a Local Economy,” illustrates how a business model can “…execute the work functions required to meet needs and keep the organization sustainable.” Or put another way, a business model shows how to utilize all assets and resources in the community without precluding future availability.

The key is to use the assets and resources without changing ownership or without modifying them to where their original purpose is lost to others who might also use them. This is accomplished through various mediums of exchange such as alternative currencies, time banking, carbon credits, renewable energy certificates, and volunteering that provide liquidity of fixed assets, like land, water, facilities, equipment, housing, clothing, materials, etc., so they can be easily committed to the completion of prioritized work functions.

While money / currency remains a principal way to access resources, to buy or have a long term lease agreement limits access by other community members. It also runs the risk that ownership and control of assets and resources transfer to people outside the community. This imposes another set of restrictions on access and use and contributes to economic leakage, which weakens the community’s chances for sustainability. A Sustainable Seattle report, Why Local Linkages Matter: Findings from the Local Food Economy Study, offers an excellent overview about the consequences of economic leakage related to food sourcing choices and ways to return to a more sustainable path.

The commitment of assets and resources is associated with the completion of commissioned work functions. The same mediums of exchange that assure the flow of assets and resources also incentivize people to apply their skills, talents, and wherewithal to the tasks at hand and fulfill what is necessary to meet the needs specified by the output metrics. And, just as purchased assets often blocks the community from further access, employment often limits the person hired from participating in other work functions and the value exchanges presented by mediums of exchange other than money / currency for salary / wage.

A healthy local economy establishes sustainability through two features. First, it enables members of a community, neighborhood, or rural area to invest and reinvest its assets and resources as represented by multiple mediums of exchange into a portfolio of prioritized project and clusters. Second, it incentivizes community members to carry out the tasks associated with the integrated work functions in each project and cluster in the portfolio as they are prioritized and launched. When the combination of utilized assets and executed work functions deliver on the needs of community members the local economy is successful. And when this is done repeatedly, the local economy is sustainable.

Originally posted to Sustainable Local Economic Develop on Tumblr by Steve Bosserman on Monday, September 6, 2010

Does Your Community Meet the Needs of Its Members?

Everyone needs food to eat, water to drink, air to breathe, clothes to wear, a house to live in, and energy to heat and cool it just to survive. And to assure sustainability, add safety, health, and education for good measure. Communities where people live have the same imperative. Either they provide the means by which members can meet their needs or they outsource the responsibility to others some distance away. In the former, communities are on a sustainable path whereas in the latter community survival is put at risk when needs cannot be met.

Needs met is the universal measure of success and sustainability of any community. Does your community meet the needs of its members? To find out, take a quick survey of your community by considering the following three questions:

  • Any community members hungry; homeless; living in unhealthy and unsafe conditions; or are they confronted with no paid work; illness; limited healthcare, and inadequate life skills to influence their circumstances?
  • How do you and your community keep score on needs met?
  • What are you and other community members doing to impact the scorecard?

The answers to these questions speak loudly. If your community is like most, the answer is “Yes” to the first one. It’s almost impossible to eliminate these conditions. However, the next two answers tell the tale as to whether your community is on track to sustainability.

Their order is important. Tom Peters is quoted as saying, “What gets measured, gets done.” As a community addresses the issues identified in the first question, the answers to the second question are calories of food, gallons of water, kilowatts of energy, cubic feet of fuel, units of housing, tonnage of recovered waste, etc. Those metrics shape answers to the third question in the form of infrastructure projects and business cases that deliver outputs according to the scorecard.

In effect, how a community responds to these three questions highlights economic choices made by community members. Those responses can be mapped onto a flow diagram, such as the one below, to give an overview of the local economic system for the community.

In the local economic system above, the drive for local economic sustainability precipitates flows of community assets and work functions that increase in their range of application and depth of value-add as they proceed to a community investment portfolio loaded with infrastructure projects and business cases that, when launched, generate calories, gallons, kilowatts, units, etc., in an effort to meet the needs of community members.

By placing their emphasis on how to meet their needs, community members take ownership for their sustainability. This commitment frames opportunities to charter projects and develop businesses. It also establishes a local economic context for business models that are based on widespread participation.

So, what’s the scorecard for your community? Calories in meals or community gardens? Gallons of water or number of water meters? Kilowatts of power or utility bill assistance? Housing units or vouchers? And so it goes… How does your local economy rate in terms of progress toward community sustainability? Are unemployed and underemployed community members engaged in paid work through local businesses and organizations whose outputs help meet local needs?

These are topics for further consideration in future posts. Stay tuned…

Originally posted to Sustainable Local Economic Development on Tumblr by Steve Bosserman on Wednesday, September 1, 2010

Who’s Up for Sustainable Living?

In his October 21, 2009 keynote address, “The Coming Famine: the risks to global food security”(presentation and speaking notes) at the Productivity and Food Security Symposium in Sydney, Australia, author Julian Cribb suggested that unabated consumption combined with unpredictable climate change inevitably leads to destabilization of environmental, economic and social systems. In turn, the capability of the global food system to feed people will be compromised. He expands upon this thesis in his new book, The Coming Famine: The Global Food Crisis and What We Can Do to Avoid It. For a quick analysis, consider Mark Bittman’s review, “Seeing a Time (Soon) When We’ll All Be Dieting”, in The New York Times.

Perhaps the time is nigh to advance sustainable local food systems as suggested in the posting, “Which Food System Do You Use to Get Your Calories?”. Hence the question, who’s up for sustainable living?

Originally posted to Sustainable Local Economic Development on Tumblr by Steve Bosserman on Wednesday, August 25, 2010

What’s in the Center of Your Local Economy?

A local economy delivers needs such as food, water, energy, housing, etc., to those who reside within a specific neighborhood, community, or rural area. Like any social system, its function is predicated on what or who is in the center.

In the diagram below, those who produce goods and services are in the center. From there, the system distributes output across stages of processing, preparation, and retail into a market where people choose to purchase what is delivered from multiple competitive options. Such a design opens up the possibility to purchase needs delivered by providers in the global economy and far removed from the transactional boundaries of the local economy. With such choices comes a reduction in local business revenue, outsourcing of paid work, and leakage of expenditures to provisioners outside the area. Basically, this is the way the current global economy works. It is the antithesis to the intent of a sustainable local economy.

Production-Centered Local Economies

In contrast, people placed in the center of a local economy invite a very different dynamic as suggested in the graphic below. Members of the social system meet their needs as close to the point of consumption as possible. The retail “ring” represents the transactional space wherein people take delivery of a needed product or service after completing its value-added cycle.

People-Centered Local Economies

Since people within a given locality share the same basic needs, they, collectively, define a steady market. This stabile and consistent demand invites an interdependence among businesses in the locally-oriented preparation, processing, and production “rings”.

A local economy is, by definition, a needs economy (see At the Bottom of the Pyramid, It’s Looking Up!). The survival and sustainability of people as a social unit depend on whether they can meet their basic needs without interruption. This imperative places people at the center of their local economy. This gives them access to the assets and resources within their purview and grants them license to deploy those means in ways that assure their continuity and reasonable quality of life.

To have production in the center invites those who are not invested in the sustainability of the local system to have control over its destiny. That is not an enviable situation in which to be. What’s in the center of your local economy?

Originally posted to Sustainable Local Economic Development on Tumbler by Steve Bosserman on August 20, 2010

Greenhouses That Change the World

Richard (Rick) Nelson is the inventor of SolaRoof, a novel approach to greenhouse design and function that integrates a unique covering, heating / cooling system, and infrastructure / framework. It will revolutionize the greenhouse industry. More than that, once the materials are certified for use in human habitation, it will be disruptive to the housing and building industry as well. So what is SolaRoof, anyway, and why does it carry such potential to change the world? Let’s find out.

Revolutionary Technology:

The greenhouse construction is unlike any other. Rather than a single layer of covering or glazing there are two. Each layer is a laminate of woven fiber mesh sandwiched in between two sheets of transparent plastic material. The laminated layers are sealed against the top and bottom of the roof and wall frames to create air-tight spaces. This combination by itself offers hardly any insulating value. However, fill the space with bubbles—yes, bubbles—and the equation becomes totally different!

The distance between the two layers varies depending on the desired amount of insulating value. Each inch is roughly equivalent to an R-factor of 1. A distance of a little over a yard yields an R-factor of nearly 40. That is almost unheard of in traditional construction techniques. And given the transparency of the two layers of covering, over 80% of the photosynthesis-catalyzing sunlight reaches the inside of the greenhouse.

In the (now defunct) SolaRoof webpage: Green Buildings for Urban Agriculture and Solar Living, two illustrations show how the process works from one extreme season to the next. Quite ingenius!

Here is a picture of a greenhouse unit as its side is being filled with bubbles:

And here is what it looks like when the cavity is completely full:

Unbounded Architectural Form:

While the technology is intriguing, it is only part of the picture when determining the disruptive value of SolaRoof. Another feature is that the shape of the structure is no longer confined to a standard box or cube that characterizes many homes, buildings, or greenhouses. It can be made to fit into an infinite array of shapes, sizes, and configurations. One of Rick’s collaborators, Harvey Rayner, who is the founder of Solar Bubble Build, describes the possibilities of the SolaRoof medium as follows:

Architecture has been a long-held passion for me, but my unwillingness to engage in academic study has kept me from pursuing any real investigation into this field. Now, having started this project initially as a practical solution to expanding my wife’s rare herb growing business, I have become engrossed in the process of designing, building and developing this technology.

Increasingly, I am viewing this work as an inroad towards one day creating pure and functional architectural forms. For me, this new breed of building gets right to the heart of how form can follow function. I believe with this technology as a starting point, unique structures can be derived which reflect the beauty of the inner workings of this truly sustainable building solution.

Several examples of Harvey’s designs are featured on Bluegreen Future Buildings.

Open Source for Everyone:

While Rick has spent over thirty years developing and refining the technologies associated with SolaRoof materials and applications, the bulk or his output is non-proprietary and open source. Anyone is welcome to join the SolaRoof Yahoo! Group (restricted) wherein there are member information exchanges, articles about SolaRoof, photos, and diagrams–all is free for the taking. Rick sums it up quite well in his introduction to the SolaRoof group:

You are welcome to join this open source collaboration where we are developing and sharing DIY(Do It Yourself) know-how for building transparent solar structures. To enhance our collaborative development of the SolaRoof methods we now are building a knowledge base where everyone can contribute to building the SolaRoofWiKi. SolaRoof structures may include but are not limited to greenhouses, sunspaces, roof gardens, residential spaces… The goal of our discussion is how to use the sun’s energy to grow food, cool and heat spaces efficiently, rather than rely on fossil fuels and power grids. Our technology includes the use of bubbles to shade and insulate glazing systems, together with liquid solar collection and thermal mass storage, although any related discussions are welcome!

SolaRoof Saves World:

This bold pronouncement was found on hi-trust.tv (now defunct), one of Chris Macrae’s video experiments. Chris, knowledge management and branding expert, offered the following endorsement of the power and potential of SolaRoof:

Rick has also been using what I amateurishly call photosynthesis agriculture and architecture innovations for over 20 years. I have known him for about 4 years in my capacity of hosting radical innovation meetings round London. I suggest a triple-wishing game – you mention a region or peoples in the world where sustainability that matters most to you, and Rick answers with what is doable now, what is developing, and what is his biggest collaboration wish for the region.

Perhaps we can make more videos if people decide this is one of the world’s great unknown practices worthy of a bit more open source weaving. (see Chris Macrae and Rick Nelson on YouTube)

Equally, if anyone knows someone else with inventions that empower every community to the other side of sustainability fuels (water, food, energy) crises, please see if they will join in. I would like to publish a small leaflet on the 5 most radically open guides to how peoples everywhere could collaborate around human sustainability if we take up the challenge and agree urgency is so great that we don’t need any marginal solutions; we need radical experiments…

And in a posting on crisisclimate.tv (now defunct), Chris describes the ramifications for SolaRoof as the underpinnings for a new business enterprise, Life Synthesis LLP, that aspires to the following:

…to shelter residential communities within SolaRoof systems. This includes replacing conventional resource and energy intensive climate control systems with new and dynamic structures that capture and use solar energy by bringing daylight and plants into buildings. These ecologically designed, low cost SolaRoof structures use energy capture, storage, and cooling methods to incorporate plants, water and water based liquids, creating an integrated ecosystem within the building itself. SolaRoof is both accessible and affordable to those living in poverty, but at the same time desirable to the affluent.

The Ball Is in Your Court

And that becomes an open invitation for any and all to take the opportunity afforded by this concept and apply it so that it makes a positive difference for the people directly involved, the community, the planet. Well worth the time and effort required to take up the challenge and do the right thing!

Originally posted to New Media Explorer by Steve Bosserman on Tuesday, October 9, 2007

Cycles of Communication and Collaboration

Recently, several of us were going over the litany of new terms for communication and collaboration “tools” that were less than 10 years old: blogs, mashups, crowdsourcing, webinars, podcasts, etc. just to name a few. It became obvious as we discussed it further than many of us in the conversation were relatively clueless when it came to defining what each is, what it does, how it works, and what were the benefits. As in most instances where there are too many dots and no clear picture in mind to connect them; a framework would be helpful.

The quadrants and circular arrow in the diagram below illustrate a progressive path of organized social interactions. It starts with the blog: the primary virtual means by which an individual, almost any individual who has access to the Internet, announces to the world – here is who I am, what I think, and what I care about. It is a powerful statement of independent thought, self-awareness, and clarity of purpose that any blogger makes simply by posting a message.

When individuals put themselves out there, they are likely to be “discovered” by others who share common principles, interests, and affinities. One of the most likely places to be “found” is in a social network. In these far-ranging open communities individuals extend their connectivity, learn more about themselves and each other, strengthen their affiliations, and become more intentional about doing certain activities together rather than individually.

At this stage, groups engaging in some sort of purposeful collective effort benefit by having collaboration spaces for more efficient and effective teamwork. Here they can work openly among themselves to give projects definition, open their assumptions for testing and scrutiny to those beyond their team boundaries, and adapt the projects to what is learned for more successful and acceptable results.

Of course, such results warrant wider exposure in global networks. News releases are presented to a broader audience for further sponsorship, investment, or utilization–and feedback. Learning and adaptation are triggered on a broader scale. Quickly we know if what we are doing is having the intended result; do others believe in it as we do; what other steps can we take to increase the viability, and sustainability of our offering.

This is where the cycle returns full circle to the blog where further commentary and endorsement (or not) about the news release is made in the context of what is important to the blogger—and the cycle starts anew. Of course, beginning the next round means starting at a different place and time, having more experience, and making additional discoveries between rounds. These are multiple cycles that radiate out in a spiral model approach.

So how do the tools we have available fit into this communication and collaboration cycle? A few are highlighted in the picture below.

There are many nuances and subtleties to each stage of the cycle; and there are certainly MANY more examples of software and system tools that can be included. However, this should give you a feel for how the overall process functions.

Here’s an example for your consideration:

In 2001, Roger Beck, a teacher at Worthington Kilbourne High School in Worthington, Ohio, initiated a program called Building Academic Skills and Experiences (B.A.S.E.). B.A.S.E. integrates twelfth grade English, Government / Economics, and Technology Education. In 2004, this program was linked with Habitat for Humanity in a housing construction project called Home B.A.S.E. In his most recent blog postings, Mr. Beck outlines progress on the current 2006 – 2007 Home B.A.S.E. project – a LEED-certified home – that is now drawing to a close.

One of those groups whose members are very supportive of Roger and his team is a local Worthington social network named, Sustainable Worthington. An announcement to their members stated the following:

WKHS Home B.A.S.E. LEED house pilot project, 258 N. 21st Street, Columbus, OH, Saturday, September 22, 2007, 2:00 p.m.: Roger Beck, the teacher who developed this excellent program, will give us a tour of this amazing house, which offers green solutions to an amazing array of issues facing every homeowner. For a preview, go to where you will see great photos and an archive of the weekly project updates. Come to be educated and inspired!

When Mr. Beck and others initiated their most recent project last year, they sought volunteers in a number of collaborative spaces. This one, the Columbus Chapter of the Construction Specifics Institute, heralded the following headline:

COLUMBUS CSI CHAPTER INVITES YOU TO TAKE PART IN GIVING A HAND UP: Do a good deed, network with fellow CSI members and be part of building a pilot LEED home!

The attraction of volunteers to this project was based on past successes such as the one that ended in 2006 which was described in the news release1 following a public meeting for Green Energy Ohio in May 2006. It includes a link to a blog dedicated to the project.

The tour is today; I am participating. That will result in another blog posting – stay tuned…

Originally posted to New Media Explorer by Steve Bosserman on Saturday, September 22, 2007

  1. News release is no longer available online