A feature of the People-Centered Development Forum,   Release Date March 15, 1992

by Michael Kinsley

All rights to this paper are retained by Michael Kinsley, director of the
Rocky Mountain Institute’s Economic Renewal Program, a self-help technique for
sustainable economic development. The Program’s materials and strategic-planning
process are adaptable by community residents to unique local conditions. Its
Economic Renewal workbooks and casebooks are used by the Small Business
Administration and the Department of Energy. These books and training seminars
are available from RMI, 1739 Snowmass Creek Road, Snowmass CO 81654-9199. This
paper is distributed by the People-Centered Development Forum Information
Service as a public service and may be freely reprinted or otherwise reproduced
and distributed with appropriate credits to the author and to the Rocky Mountain
Institute. The author and PCDForum would appreciate receiving a copy of any
publication in which it is reprinted.

The assumption that economic prosperity requires growth seems so reasonable
that most of us don’t think much about it. After all, we’ve always been told
that growth is the solution to our economic problems.

This assumption is so pervasive that virtually every community is looking
for ways to grow in order to solve its local economic problems. Declining
communities search frantically for any new business they can find, while growing
communities assume that they can grow their way out of their problems.

But to believe that prosperity requires growth is to concede the demise of
thousands of communities for whom growth is simply not a realistic possibility.
It also condemns fast-growing communities to a stormy and vexing future.

Fortunately there are alternatives: sustainable economic development
strategies offer practical solutions to declining communities, regardless of
whether they are able to attract growth. These strategies also offer realistic
alternatives to communities overwhelmed by the side effects of too much growth.
They offer a manageable future for communities that are comfortable and want to
stay that way.

For the purposes of this discussion, "growth" is defined as
expansion in the size of a community for example, construction of buildings,
roads and utility networks. Though an increase in business activity and creation
of jobs might also be included in the definition of "growth," it will
be referred to here as "development." Before we explore more
thoroughly the distinction between growth and development, a brief glimpse at
declining and growing communities is useful.

Declining communities

Business failures, loss of jobs and population, lack of opportunity for
young people, deteriorating infrastructure, and loss of hope are some of the
daunting problems of a declining community. The town’s economy is probably based
on one or two saleable resources such as timber, coal, wheat, or a manufactured
product. Such towns may seem prosperous until the international economy decides
that the town’s products are no longer worth what the town must charge for them.

The normal response to decline is industrial recruitment, the search for any
new business that might want to move in. But outside businesses are seldom
inclined to invest in someone else’s problems. Most business recruitment efforts
in declining towns lead to disappointment. The few towns that successfully lure
new business often give away so much land, infrastructure, tax breaks that the
result is a net loss to the community. Worse, in a few years, the new business
may move on to a town that offers even bigger give-aways.

Growing communities

Saleable resources are also the economic basis for growing towns. These
towns are growing because their resources are in demand. But in many of these
towns, the resource (for instance, coking coal) is in demand one year, while
nobody wants it the next. The town experiences radical economic fluctuations, "booms"
then "bust" hence the term, "boom town".

Quality of life is the saleable product in many other growing towns. They’ve
got clean air and water, little traffic, and low crime. They feel a lot more
like home than the city. They may be resort towns or towns that are attractive
to retirees and second-home buyers. They may be desirable towns situated within
a long commute from a city. They may also be towns that attract the new wave of
information businesses that depend upon telephones, fax machines, and computers.

Past development has been beneficial to these towns. However, in virtually
every fast-growing town an ill-fated scenario is played out: townspeople accept
virtually any new proposal for growth because they want to maintain a healthy
economy. More people move into the area and things look pretty good.

Then, the side effects hit home: the sparkling, clear air begins to turn
gray, traffic slows and snarls, parking gets more difficult, doors must be
locked, taxes go up, and the quaint old buildings that made the town feel like
home are replaced by massive blocks of cement and glass.

Though they bring in needed revenue, second-home and resort buyers tend to
bid up the price of housing. Working people, forced to relocate many miles from
the community they built, face a long, often dangerous, commute. What had been a
close-knit community begins to feel like an amusement park to which locals drive
each day to operate the rides and sell trinkets.

Can a community prosper without growth?

Some residents of fast-growing towns inevitably begin to talk about
controlling growth. Others won’t hear of it. For instance, struggling retailers
appeal for more growth so that they can get more customers. But over time,
increased sales are the landlord’s signal to ratchet up the rent. Fast growth
not only attracts more retail customers, it also brings more competitors and an
upward spiral of costs: higher rents, higher taxes, and demands for higher wages
to meet the higher cost of living. Cash flows faster out of the hands of the
business people. Formerly relaxed and friendly, business becomes tense and
frenzied. "Gone fishin" signs fade into memory.

No matter how serious the problems of growth become, there will always be
hard-working local business people who, for their own good reasons, appeal for
more growth. Looking for justification, they will say that new taxes from growth
will pay for the solutions to growth problems. But in most cases, problems
worsen while taxes increase to pay for attempted solutions (e.g. affordable
housing and mass transit). Locals end up subsidizing growth with increased

Residents of growing town find that Alice was right when, in Wonderland, she
said, "The hurrier I go, the behinder I get". Their quality of life,
often their only saleable product, begins to decline. Their sources of income
tourist, second-home buyers, and retirees who cherished the small-town character
and clean environment begin to look for the next unspoiled paradise.

Overwhelmed by cars, congestion, pollution and taxes, residents of these
overgrown towns are drowning in someone else’s prosperity. Many are beginning to
examine more carefully each new proposal for growth to determine if possible
benefits outweigh side effects. But virtually none of these communities has
realized that they need not give up prosperity as they slow down their growth,
that there are sustainable development alternatives that do not require growth.

Ironically, the thousands of declining towns that would benefit from growth
are seldom in a position to attract the growth with which fast-growing towns are
struggling. The only opportunity for prosperity in most declining towns is
development without growth. Because, contrary to conventional wisdom…

Development does not equal growth

Though the sound economy requires development, that is, vigorous business
activity it doesn’t require growth, that is increased community size. A
community might be compared to a human being. Human growth after maturity is
cancer. When a town continues to grow after maturity its cancer is manifest in
many ways environmental degradation, spiteful controversy, and loss of a sense
of community.

But development is very different from growth. After reaching physical
maturity, we humans can continue to develop in many beneficial and interesting
ways learning new skills, gaining deeper wisdom, and much more. Similarly, a
community can develop itself without growth. It can create housing and jobs,
expand cultural and educational opportunities, improve health, and protect the
public safety.


Surprisingly, there are plenty of examples of economic development without
growth. One is Osage, Iowa, a town that plugged its energy leaks and is now
saving over $900 per family per year. Money that had been spent out of town to
buy gas and electricity is now additional, essentially tax-free, income. A total
of $1.2 million now stays in Osage each year. Much of it recirculates in the
economy strengthening local businesses without growth in size of the community.
Moreover, the program put local people to work plugging energy leaks
(insulating, caulking, installing new lighting etc.). Osage’s simple program is
so dramatic that it has repeatedly made nationwide news.

In plugging its energy leaks, Osage plugged a huge leak in the local
economy. Researchers for Rocky Mountain Institute’s Economic Renewal Program
have found scores of examples of towns that plugged other kinds of leaks in
their local economies. By becoming more efficient, they’ve improved the bottom
line. Rocky Mountain Institute calls plugging the leaks the first principle of
Economic Renewal.

The second principle is support existing businesses. A businesswoman in
Eugene, Oregon, did just that when she started a program linking local suppliers
with local buyers. In its first year, "Oregon Marketplace" generated
$2.5 million in new local contracts and 100 new jobs just by identifying the
items purchased out-of-state that could be obtained locally.

The Eugene program didn’t require growth. Rather, it created more wealth by
using existing resources more effectively. Like Osage, it caused locals’ dollars
to be re-spent more often. Each dollar re-spent within the community provides
all the benefits of a new dollar from the outside, without possible side-effects
created by growth.

Any town will slowly bleed to death if its imports exceed its exports.
Because declining towns have lost some portion of their export capacity, they
must either reduce imports or find additional exports. Two excellent ways to
reduce imports are plugging leaks and supporting existing businesses. These two
efficiency measures are particularly powerful when applied to the basic
necessities energy, food, water, and housing. A town that becomes more and more
efficient in the basic necessities and produces many of its necessities locally,
is far stronger and more economically resilient.

The third principle of Economic Renewal, encourage new local business, can
be pursued by identifying an underutilized local asset and putting it to work.
Until a group of women in declining Colquitt, Georgia, started canning the
Mayhaw berry and selling jelly to specialty shops, residents had taken the
native berry for granted as something to can for family use. A work force of
forty is now producing and selling Mayhaw jelly in 36 states, with sales
doubling each year.

None of these examples required growth in the scale of the community.
Therefore, each of these, and hundreds more found by Rocky Mountain Institute
researchers, will work in towns that cannot attract growth. Each will also work
in towns that desire less growth.

Though growth in many declining communities is unlikely, in others it
remains a possibility. After pursuing the first three principles of economic
renewal, these communities are far more attractive to investment. They may then
be in a position to recruit compatible business, the fourth principle of
economic renewal. In this process a community assures itself that its
recruitment targets will be compatible with local conditions and local goals,
that the community will experience a net gain rather than being ripped off.

Careful consideration of compatibility is also appropriate in growing towns
that prefer to limit growth. They can examine each growth proposal to determine
if it is compatible with the desired scale and character of the community.

Sustainable economic development

One compelling characteristic of the four principles of Economic Renewal is
that, because they offer solutions that are sustainable over time, no matter the
condition of the local economy, their solutions are applicable to both declining
and growing towns.

A global perspective is often useful when examining local problems. For
instance, we know that the Earth is not growing, but it is developing. Since the
economy is a subsystem of the earth, it cannot continue to grow forever, but it
can continue to develop.

In contrast to growth, sustainable development is a potent new approach to
economic development that includes three important aspects: renewability,
equity, and digestibility.

A sustainable economy is renewable in that it uses resources no faster than
they can be replenished. For instance, logging towns will become ghost towns if
they cut their timber faster than it grows back. Agricultural towns will ease
themselves out of business if their level of production requires removing more
nutrients from the soil than are replaced. Retirement and resorts towns whose
growth results in urban pollution and congestion will grow themselves out of

The natural resources of these communities timber, soil, and quality of life
are their capital assets. The problem is that these communities are using their
capital assets as if they were income which is like dairy farmers selling their
cows to buy feed. Soon there will be no cows to feed.

When we deplete our natural resources, we are treating our capital assets as
if they were income. That’s what you do when you liquidate a retail business:
you sell the tables, counters, and cash registers to pay the bills. When we
deplete our resources, we’re treating the economy as if it’s a business in
liquidation. We spend the income, then bequeath the mess to our children.

That’s where the second aspect of sustainable development comes in: equity
among generations. If a local economy is based on the depletion of an important
local asset, for instance a certain mineral, then future generations will not be
able to make a living in the same way. Unsustainable development creates a very
difficult future for our children.

Equity among different people is also part of sustainable development. If
the location of certain development reduces a neighbor’s property values, then
the development is inequitable. The neighbors are paying the cost of the
development without receiving benefits.

The third aspect of sustainable development is revealed to us when we see
development, not as a straight line from capital and labor through production to
consumption, but as a circle that returns the by-products of production and
consumption to the system. When by-products are dropped at the end of the
straight line they are regarded as waste (which hinders development with
ever-increasing costs). In contrast, when the by-products are reused, recycled,
or biodegraded, then they are regarded as resources, as capital to sustain the
development cycle. A shorthand way of saying this is that sustainable
development is "digestible".

The "straight-line" perspective on development leaves out the
environment; the cyclical view includes it. Though environmental concerns were
once seen as narrowly focused on trees and little furry creatures, it is now
clear that they are essential for long-term (sustainable) economic viability.
Sustainable development requires careful consideration of the "ecological
threshold", the point past which an ecosystem can no longer be damaged or
altered without permanent failure of that ecosystem and the economy that depends
on it.

In Ethiopia 25 years ago the land was fertile and bountiful. Nobody thought
about sustainability. But each year, as the population grew, Ethiopians
intensified farming practices that exhausted their soil. Now, too far down an
unsustainable path, its ecological threshold crossed, Ethiopia’s amber waves of
grain have become parched thornbush and sandstorms.

Though at first, it may seem absurd to think that this scenario could play
out in our country, the American dust bowl in the 1930’s is a distant, though
painful, case in point. We can and must learn from these tragedies. Year after
year, Ethiopians made reasonable decisions where and what to plant, what to
export that lead to disaster. Each of those decisions was no more dangerous than
each decision made today by the citizens of American towns.

Recognition of the need for sustainability compels communities to confront
each important decision about proposed development with the questions, "Is
this particular kind of development sustainable? Is there anything about it that
is not renewable, equitable, or digestible?" Sustainability is sometimes
difficult to determine; it can be a close call. But to save ourselves the grief
of unintended consequences, it’s worth asking these questions in the beginning.

In summary: while growth is often perceived as the only path to economic
viability, the good news for both declining and growing communities is that
there is an alternative. Prosperity does not require growth, it requires
development that is sustainable.

The drama being played out in local communities the controversy, the social
and environmental side-effects of growth and decline is not the concern of a few
isolated people. Rather, it’s their version of a drama that will play across the
planet as the international economy impinges on each individual’s life, as the
population swells, and as non-renewable resources become more scare. The global
perspective makes it painfully clear that, if our strategies for economic
development are not sustainable, they will be terminal.

Back ] Home ] Parent Page ] Next ]