Reimagining Economics

I wanted to start my revitalised blog by writing about some of my work interests. This post is all about our footprinting, economics and decision making. It’s some loose thoughts I’ve been playing with. 

I’m interested in the question of how we can shape our economy to achieve a better harmony between our ecological, social and financial interests. I’m going to call this a One Planet Economy1. When discussing this, language is important and in this post, I want to challenge the way we use the terms economy and footprinting and present novel ways of talking about them and understanding their relationship. I’ll argue that this is essential if we are to make serious steps towards creating a healthy, One Planet Economy.

To get to grips with what a One Planet Economy means, it’s necessary to revisit what we mean by the term economy and footprint. When we think of the phrase economics, we typically think of the flow and value of money. When we think of someone that flies from the UK to Australia for a one week holiday, we might say that they have a massive carbon footprint. However when examining these terms, it becomes clear they warrant meanings that are broader than they are often assigned. I’ll start with two notions:

1. Every action that we undertake has a footprint associated with it;

2. A footprint is the ripple created on the fabric of our economy which has financial, social and environmental dimensions.

As we will explore in a moment, by broadening the concept of the term footprint, it enables us to have a more connected understanding of our relationship with nature, financial systems, environmental systems, and each other.

When defining the term footprint, I referred to the fabric of our economy. Conventionally, definitions of economics are concerned with the production and consumption of goods and services, the supply of money, and what state of health these are in. Whereas etymology tells us that the words ecology and economy share the same prefix, -eco, which comes from the Greek word: oikos, meaning home. Perhaps we could consider ecology as the study of our home and the economy is its management. Economics is therefore concerned with housekeeping which from personal experience, is about much more than money. To be good housekeepers, we seek harmony and health in the home.

Therefore what used to be described as the three dimensions of sustainability: economy, social and environmental can be retired. Rather we should be saying there are three, interdependent dimensions to the economy: financial, environmental and social, as summarised in Box 1:

Box 1: Three dimensions of an economy

Dimension Explanation
Financial The financial dimension of our economy is centred around transactions which occur when parties agree to the value of the transacted good or service. This is commonly expressed in a currency. Currencies usually rely on money as a unit of exchange and this has little intrinsic value as a physical commodity, but derives its value from being declared by the government as legal tender, where it is unlawful to not accept the currency as a means of repayment of debts. This concept is known as fiat money.
Environmental The environment encompasses all living and non-living things on Earth. These “things” usually exist as interacting communities, which we call ecosystems. Ecosystems occur at different scales and are interconnected with each other. You will find microbial sized ecosystems that exist inside our gut, to river based ecosystems, all the way up to what we can consider a planetary-scale ecosystem in the Gaia hypothesis. This proposes that the planet can be viewed as a synergistic self-regulating, complex system that helps to maintain and perpetuate the conditions for life on the planet.

There are various processes and interactions that take place in an ecosystem; these are called “ecosystem functions“. Some of these functions provide a direct benefit to humans and these are called “ecosystem services”. We would not survive without these ecosystem services and everything, including technology derives from it. For example, services such as climate control, pollution filtration, food and fresh water are critical to our existence.

Social The social element of our economy is concerned with the relationships with ourselves and each other. When we fail to achieve a satisfactory social foundation, we experience human deprivation. What determines an acceptable social foundation is generally agreed through social norms and its elements include aspects such as happiness, cultural, status, beliefs, love, belonging, esteem and self-actualisation.

Every dimensions matters

All dimensions of our economy are critical for a society to exist and all of them get abused and chipped away by our collective failures and greed. This will always be a struggle and in our gloomiest moments, we may feel like we’re stuck in an ant mill, the bizarre phenomenon whereby army ants  get stuck in a spiral, committing mass suicide as they walk until exhaustion.

ant-death-spiral
The death spiral of an ant mill

Let’s not allow this. Humans have a stubborn determination, an incredible capacity to innovate and adapt, and so we should keep working, mindfully and consciously, towards something better. What else is there to do?

Making decisions for a One Planet Economy requires a familiarity of issues across all three dimensions. Our educational system needs to instil these ideas into children, helping them know how to navigate and approach complex systems.

Ways to approach the environmental dimension

Of the three dimensions of our economy, the environmental component, I would argue, gets the least respect from our leaders and decision makers. Our environmental interests are concerned with improving the relationship between human activities by retaining and enhancing ecosystem functions and services we draw from.

A key concept in our environment is biodiversity, the variety of plant and animal life which makes up the building blocks of an ecosystem. As we simplify ecosystems, their ability to provide ecosystem functions decreases. Therefore the more biodiverse an ecosystem is, the more resilient it generally is to environmental perturbations and the loss of key functions are less likely.

When looking at the environmental dimension, we are called to take a broad perspective that respects the various Earth system processes that support life on Earth. The notion of ‘planetary thresholds’ has been promoted by the Stockholm Environment Institute and is useful for estimating how close to a threshold the global human community can act, without seriously challenging the continuation of the current state of the planet. Contributors to this approach have identified nine Earth system processes that are considered to have safe thresholds we must operate within – we call this our environmental ceiling. The systems are:

  • Climate impacts
  • Ozone depletion
  • Atmospheric aerosol loading
  • Ocean acidification
  • Global freshwater use
  • Chemical pollution
  • Land system change
  • Biodiversity
  • Biogeochemistry

When we talk about footprints

It’s common to hear people refer to their footprint as a size: from small to large. To have meaning, the method of measurement is usually relative, e.g. flying 10 miles having a greater carbon footprint than walking 10 miles. While an important measurement, it feels that people and organisations sometimes become too focused on carbon footprinting and forget a broader view of their footprint.

When we define a footprint to mean “the ripple created on the fabric of our economy”, the language of size becomes inadequate. Instead we are examining the nature of that ripple which we know has financial, social and environmental dimensions. Then from this, we can adopt the right measures and targets to examine this ripple.

This is why frameworks like Bioregional’s One Planet Living principles provide businesses with a helpful way to navigate their footprint:

Bioregional's 10 One Planet Living principles
Bioregional’s 10 One Planet Living principles

Using this approach: an example

So how might this work in practice? When working at Bioregional, I did some work with two local authorities which wanted to embed “One Planet Living” thinking into its decisions. This involved undertaking a triple bottom line assessments, working with the procurement teams and analysing the footprint related to everything the Council spent it’s money on. This covered carbon, ecological, pollution, water and even employment. Although rough, it gave insights into different components of their footprints, highlighting that the energy and transport footprint was an important, but small component of their overall footprint.

Following this, using One Planet Living as a framework, we worked with the the procurement team and strategy team to design tools that helped them assess whether strategic or procurement decisions were fitting with their ambition towards One Planet Living.

The tool worked by giving scores to each One Planet Living category, which could be aggravated together. Firstly, there were minimum standards for each category. For example, under “Land use and wildlife”, if a project was deemed to have “a detrimental and destructive impact on natural habitats, resources or wildlife with no actions in place to mitigate and minimise these impacts” – then it would not be acceptable to proceed.

When aggregating scores, you can get a clear picture of whether the project is controversial or not. It’s also possible to set minimum scores for projects to proceed and pit two projects against each other.

portfolio-tool3

Footnotes

1. One Planet Economy isn’t a new term and most prominently if you search for it online, you find details of an EU funded project called the One Planet Economy Network. This EU project was about carbon and ecological footprinting measurement, which although relevant, it’s not what I’m writing about in this post.

A case for not working full-time

In his book, How to be free, author Tom Hodgkinson writes a chapter called Cast of your watch. In this, he explores our relationship with time and how it has evolved since the industrial revolution, a period that enabled households to own their own clock and factories led the way in encouraging standardised working hours. His premise is that we need to revalue and rethink the way we consider time. Working less and casting away our obsessions with efficiency and productivity will ultimately make us healthier, happier, as well as encouraging a more sustainable future. The book is provocative, visionary, humourous and I loved it.

Several years after the publication of How to be free, the New Economics Foundation released a report called 21 hours. It was a vision of a radically different future in which people work much shorter working weeks, enabling communities to become stronger, healthier and shift towards non-materialist values, reducing carbon emissions and safeguarding natural resources. It was an attractive vision.

At the time I was working at BioRegional and I became obsessed with this idea and its potential for supporting the transition we need towards One Planet Living. This is thinking beyond just an ecological footprint within planetary thresholds, but a life full of meaning, less guided by money. I tried to work some of the concepts into my consultancy with local councils, and spent time modeling and exploring its implications on employment. Unfortunately, I was not in a position to work-up the concept much further than some spreadsheets on my desk. It did, however, inspire me to ask my employer to allow me to work a four-day week. My reasoning being that I would still get similar quantities of work done and it would enable me to develop my knowledge and career further on my extra day off. I took the pay-cut and found I was much happier, essentially having three day weekends with more space to look after myself. With my workaholic tendencies, I think it was also good for my health. It caused some envy and I appreciated that this option was not possible in many of my friend’s jobs. I recognise the privilege.

With my current job I am officially meant to work a 4.5 day week. I hardly ever stick to this and counting the hours, I usually far exceed a 5 day week. Because I love my job, I find less distinction between pleasure and work so I’m happy to put in those extra hours. However, I could still consider increasing my pay to reflect a 5 day week but I won’t. Why is that?

It’s not because I’m being stubborn about giving in to the 5 day work week. The main reason is that I like the potential that some weeks, I can take an afternoon off and run away. That’s something a 5-day per week employee can’t do.

The important task I have is to keep reminding myself and the people around me that I work a 4.5 day week – and to make sure I factor it into my timetable each week. Otherwise, I will never take that time off!

Living in a doughnut

A few years ago, the Stockholm Environment Institute released a paper on planetary boundaries. I failed to rouse much interest from friends about the paper, but it had me tremendously excited. It provided me with a much needed framework to describe how climate change isn’t the only major threat of our lifetimes, there are several others and each one can be considered to have a safety boundary. Together with climate change, there are two other planetary boundaries we have crossed: exceeding safe levels of nitrogen extraction from the atmosphere (to produce fertilisers for crops and animal feed) and biodiversity loss. By illustrating this (see picture below) we have a platform for talking more holistically about solutions, and can make sure we don’t miss gaping holes in our environmental policies.

thresholds
SEI (2009), Planetary Boundaries: A safe operating space for humanity. Featured in the Nature Journal.

But there is one gaping hole that is continually exploited by corporations and journalists. This is the supposed incompatibilities of pursing environmental goals with social justice. I know that badly put together environmental policies can exacerbate social justice but is this idea really true in general? That’s exactly what Oxfam has been discussing in the run up to the Rio Summit.

Oxfam’s have just released a discussion paper that explores the dynamics of living within safe environmental limits and within acceptable levels of human deprivation, and illustrates the concept in a doughnut (see picture).

doughnut
The social foundation forms an inner boundary, below which are many dimensions of human deprivation. The environmental ceiling forms an outer boundary, beyond which are many dimensions of environmental degradation. Between the two boundaries lies an area – shaped like a doughnut – which represents an environmentally safe and socially just space for humanity to thrive in. It is also the space in which inclusive and sustainable economic development takes place.

Individually, none of the ideas or data is new, but the report is a great step towards tying together some of the top-level discussions around social justice and the environment. It also does well to explain the all important question: what happens to the environment when poor countries start consuming more? Here’s what the data suggests:

  • Food: Providing the additional calories needed by the 13 per cent of the world’s population facing hunger would require just 1 per cent of the current global food supply.
  • Energy: Bringing electricity to the 19 per cent of the world’s population who currently lack it could be achieved with less than a 1 per cent increase in global CO2 emissions.
  • Income: Ending income poverty for the 21 per cent of the global population who live on less than $1.25 a day would require just 0.2 per cent of global income.

Meeting basic human needs such as food security, energy and income poverty must be done in tandem with a greater global equity in the use of natural resources. The greatest reductions have to come from the world’s richest consumers. Unfortunately, as George Monbiot writes in his blog:

“the politically easy way to tackle poverty is to try to raise the living standards of the poor while doing nothing to curb the consumption of the rich. This is the strategy almost all governments follow. It is a formula for environmental disaster”.

All this has motivated me to work for BioRegional and access:energy, two organisations that I believe understand the dynamics between environmental limits and global equity. BioRegional is an organisation that invented the One Planet Living framework, which helps people design sustainability action plans that are holistic and ambitious (in line with a sustainable and globally equitable level of consumption). access:energy is a social enterprise based in Kenya that designs and manufactures affordable, locally-made, clean energy technologies (focussing on wind turbines).

Sources

What can we learn from M-Pesa?

One of the interesting technology revolutions that’s happened here in Kenya is mobile banking. M-Pesa, (M for mobile, and pesa means money in Swahili) is a service that you set up on your phone, enabling you to pay for things by text message. After topping up your M-Pesa account, you can easily pay friends, bills and shops by sending them a text message. You can even text the cash machine to withdraw money. It’s really easy.

It’s made me think about the opportunities for local currencies in the UK. I’m a big supporter of local currencies as they can help protect independent shops, enabling a more vibrant and diverse local economy, supporting a greater number of jobs and entrepreneurs. Sadly and rather embarrassingly,  despite my love of local currencies, I never used the Brixton Pound even when I lived so close to Brixton last year. I think this was for multiple reasons – partly laziness, but also a lack of it’s presence about the town.

Brixton Pound are now launching an e-banking service, allowing you to pay-by-text. If they get this right, it could open up an exciting new opportunity for them, as well as for other local currencies. Imagine being able to quickly pay in local currencies using your phone as you travel around the country. It could make local currencies much more easier to access and use. From a setting-up point of view, the e-banking system can easily be replicated and means Councils or groups setting up a local currency can allocate greater funds to marketing and town presence – something the Brixton Pound lacks.

Creating local currency bubbles is one way to keep money leaking out into un-trusty big banks, which according to NEF, are now taking £46 billion a year in subsidies from the tax payer, more than any other sector. One interesting thing that M-Pesa does in Kenya, is only allow one-way international transactions. This means that money can only be fed into M-Pesa from overseas and not the other way. This is a clever way to protect the currency in Kenya but also M-Pesa itself (owned by Vodaphone and Safaricom). Perhaps local currencies in the UK should use a similar system to protect themselves?

I really hope local currencies expand and grow, I think it may be part of the picture for achieving prosperity without growth. But to work, I really think they need local councils fully on board and supporting them. One way to do this quickly, would be for Councils to start paying a percentage of their employee salaries in local currency. There’s certainly enough outlets accepting the Brixton Pound. I wonder if employees of Lambeth Council would be up for that?