Community Currencies for Sustainability

The currency of community is a community currency.

http://bruce-conway.com/survivethenwo/noahs_archives/Barter_and_alt_currencies.pdf

BARTERING FOR A BETTER FUTURE? COMMUNITY CURRENCIES AND
SUSTAINABLE CONSUMPTION
By
Gill Seyfang
CSERGE Working Paper EDM 04-10

Centre for Social and Economic Research on the Global Environment (CSERGE) University of East Anglia, Norwich, NR4 7TJ, UK
Author contact details:
Gill Seyfang: email – g.seyfang@uea.ac.uk
Tel: +44 (0) 1603 592956
Fax: +44 (0) 1603 593739

Sustainable consumption is gaining currency as a new policy objective, requiring consumers to enact preferences for sustainability through the marketplace. But there is a limit to the changes in consumption behaviour which individuals can make within social institutions, and
current policies do not question the materialism inherent in current development policies. New social institutions, or structures of provision, are needed to enable the lifestyle changes required for sustainability. This paper critically assesses the potential of one such alternative system of provision: namely money and exchange. ‘Community currencies’ is the generic term for a wealth of alternative types of money which are springing up in communities throughout the world to address social, economic and environmental needs. This paper presents new research findings and reviews experience of three distinct types of community currency with goals of sustainable consumption, each with a different purpose and design, and assess their potential as new institutions for environmental governance. The currencies examined are: Local Exchange Trading Schemes (LETS) which aims to rebuild local economies through cashless exchange; Time Banks promote volunteering, civic engagement and mutual self-help by rewarding unpaid work in the community; the previously unresearched NU-card, a mainstream ‘green loyalty point’ currency piloted in the Netherlands which incentivises sustainable consumption. This paper discusses the scope and potential of each of these models, the values they represent and the barriers they face, and will suggest possible ways forward for creating new social infrastructure for sustainable consumption.

1. INTRODUCTION

‘Sustainable consumption’ is gaining currency as a new sustainable development policy objective, requiring widespread changes in behaviour at all levels of society to reduce the environmental impacts of consumption. While new international environmental governance
institutions are growing upwards from state to global scale to tackle system-wide environmental issues, there is an increasing focus upon smaller-scale governance and citizen action at various sub-national levels, from local government to grassroots community groups and individuals. There is a growing policy emphasis on the role of socially- and environmentally-motivated individuals to exercise consumer sovereignty and transform markets through the minutiae of daily purchasing decisions. However a sociological analysis of consumption suggests that the scope of individuals and groups to change their behaviour is limited by existing social infrastructure and institutions – systems of provision – which ‘lock in’ consumers into particular patterns of consumption.

This paper examines one particular system of provision – namely money and exchange. A ‘new economics’ approach to analysing economic activity highlights the socially, environmentally and ethically unsustainable implications of the behaviour and consumption patterns promoted by the characteristics of modern mainstream money. For instance, these include the externalisation of environmental and social costs and benefits from economic decisions, resulting in ‘rational’ decision-making which promotes economic growth at the expense of ecological and social resilience. The new economics approach considers economic activity to be fundamentally embedded within social contexts, and so rather than proposing incentives for individuals, it articulates alternative social infrastructure and systems of exchange to rectify these problems. This paper critically assesses the role and potential of such an alternative infrastructure – regional and local socio-economic systems – to overcome the barriers to sustainability identified in conventional money systems. ‘Community currencies’ is the generic term for a wealth of alternative types of money which are springing up in communities throughout the world. There is a growing range of community currencies developing in the US and UK, among other countries, which address social, economic and environmental needs. They enable – and incentivise – particular types of exchange relationships and consumption patterns. While they are still small in circulation and impact, they deserve attention as potential models of alternative ways forward for sustainable economies and societies.

Previous research has examined the role of community currencies as providers of informal employment for the socially excluded (Seyfang, 2001c, 2004d; Williams et al, 2001) or as community-building tools (Williams, 1996; Seyfang, 2004c), the sustainability implications of community currencies have rarely been investigated (Seyfang, 2001a is one example). This paper makes a timely contribution to the debate on governance for sustainability by discussing the role and potential of community currencies to create new systems of provision and exchange which promote sustainable consumption by enabling individuals and groups to change their behaviour patterns. Empirical evidence of ‘exemplars’ of sustainable consumption initiatives is needed to inform policy, and here new research findings are presented to assess experience of three distinct types of community currency with goals of sustainable consumption. These are: Local Exchange Trading Schemes (LETS), time banks, and the previously unresearched Nu Spaarpas green savings scheme. This paper will discuss the scope and potential of each of these models, the values they represent and the barriers they face, and will reflect on the implications of these initiatives for theories of environmental governance and sustainable consumption in the context of building new systems of provision. Finally, it will suggest possible ways forward for community-level sustainable consumption with appropriate policy recommendations.

2. SUSTAINABLE CONSUMPTION: A MAINSTREAM STRATEGY

Responsibility for environmental decision-making in its widest sense is shifting from central government to new sets of actors and institutions, at a range of scales (Adger et al, 2003). At the same time as new international governance institutions are growing upwards from state to global scale to tackle system-wide environmental issues (such as the Intergovernmental Panel on Climate Change), there is an increasing focus upon smaller-scale governance and action at various sub-national levels, from local government to grassroots community groups (by ‘community’ we mean both communities of place and communities of interest) and to individuals in everyday consumption decisions (Jasanoff and Martello, 2004; Seyfang, 2003a).

Over the last 15 years, ‘sustainable consumption’ has become a core issue on the international environmental agenda, and the growth in what is variably termed ‘green’ or ‘sustainable’ consumption has occurred alongside an increase in the range of individual environmental actions that the government wishes to encourage (DEFRA, 2003). From its auspicious entry onto the international stage at the Rio Earth Summit in 1992, the term ‘sustainable consumption’ evolved through a range of international policy arenas, and its definition narrowed as it became more widely accepted as a policy goal. The more challenging ideas put forward in Agenda 21, the roadmap to sustainability adopted at that summit (UNCED, 1992) which concerned re-orienting development away from materialistic consumption, became marginalised as governments instead focused on politically and socially acceptable, and economically rational tools for changing consumption patterns such as cleaning up production processes and marketing green products. In the late 1990s, the OECD began researching what sustainable consumption might mean to member states, and concluded that market failure was the prime cause of unsustainability. In this strongly libertarian perspective, governments are therefore expected to correct prices and provide regulatory frameworks to influence producers to be more eco-efficient and offer consumer choices of ‘green’ products (OECD, 2002). This perspective on of sustainable consumption has become widely adopted by governments, hence its description here as the ‘mainstream’ model.

The UK government’s approach to sustainable development is founded upon a belief that stable and continued economic growth is necessary, and is compatible with effective environmental protection and responsible use of natural resources (‘cleaner growth’) (DETR, 1999). In 2003, the UK Government announced its strategy for sustainable consumption and production which also follows this approach. It defines sustainable consumption and production as: “Continuous economic and social progress that respects the limits of the Earth’s ecosystems, and meets the needs and aspirations of everyone for a better quality of life, now and for future generations to come” (DEFRA, 2003:10). In practice, this emphasises decoupling economic growth from environmental degradation, to be achieved through a range of market-based measures: making the polluter pay, eco-taxes, government purchasing initiatives, consumer education campaigns and instituting voluntary eco-labelling schemes. So the agenda has narrowed from initial possibilities of redefining prosperity and wealth and radically transforming lifestyles, to a focus on improving resource productivity and marketing ‘green’ or ‘ethical’ products such as fairly traded coffee, low-energy light bulbs, more fuel-efficient vehicles, biodegradable washing powder, etc.

The UK government, following the mainstream model, places individual consumers at the heart of its sustainable consumption strategy, calling on informed and motivated citizens to use their consumer sovereignty to transform markets by improving environmental and social aspects of production and product design (DEFRA, 2003). It cites the growth of fair trade, green and ethical consumerism as evidence that producers are responding to the signals sent by individuals, and relies upon economic instruments and markets to facilitate these 3 changes. As such, it is a highly individualistic strategy, which assesses consumption behaviour in terms of consumer incentives and market signals.

Critics of this mainstream strategy for sustainable consumption point to a number of failings in this approach related to its individualistic and overall-consumerist foundations, which they claim limit the effectiveness and scope of these measures. These are: that the mainstream strategy for sustainable consumption relies upon market signalling, which in turn is based upon pricing regimes which systematically externalise social and environmental costs and benefits; that it fails to consolidate improvements made over time, leaving them vulnerable to changes in consumer attention and concern; that it makes only consumer markets available to transformation, while significant consumption from producer industries, and institutional consumption through the public sector are immune to sustainable consumerism by individuals (which raises the issue of sustainable public procurement); that it neglects the social meanings and context of consumption which compete for influence with environmental motivation; that it is largely premised on assumptions that greater material consumption equate with well-being; that it affords the right to influence the market solely on those able to participate in that market; that it pits individuals against globally powerful corporations in an inequitable struggle; and most significantly, that it fails to see the social infrastructure and institutions which constrain choice to that available within current systems of provision (Maniates, 2002; Sanne, 2002; Seyfang, 2004a,b; Southerton et al, 2004).

3. AN ALTERNATIVE, NEW ECONOMICS APPROACH

Given that current systems of provision prevent significant changes in consumption patterns, what can be done to overcome this limitation? Efforts to create alternative systems of provision, with associated social and economic institutions and infrastructure, require a foundation in alternative values, development goals, motivations and definitions of wealth. They draw out the richer sociological meanings attached to consumption and point to collective institutions as the source of potential change. Such an alternative theoretical approach to governance for sustainability and sustainable consumption is proposed by a broad body of thought known collectively as the ‘new economics’ (Douthwaite, 1996; Robertson, 1999). This movement crystallised from a number of alternative thinkers in the mid-1980s who came together to organise The Other Economic Summit in 1985, a progressive meeting of green economists which shadowed the G7 summit of heads of state of major economic powers (Ekins, 1986). Following this meeting, the New Economics Foundation was formed, and has developed to become a leading self-styled ‘think and do tank’ which promotes ‘real economic well-being’ (Shah and Marks, 2004).

This is an environmental philosophical and political movement which is founded on a belief that economics cannot be divorced from its foundations in environmental and social contexts, and that sustainability requires a realigning of development priorities. It is a theory that environmental wealth, and the value of labour to sustain communities and families, must be recognised, accounted for, and protected in order to support the market economy which rests upon this bedrock. This theory stresses the benefits of decentralised social and economic organisation and local self-reliance in order to protect local environments and economies from the negative impacts of globalisation, and reducing the scale of material consumption.

The scale of economic activity and the level at which decision-making and social organisation occurs is a core aspect of these writings, as witnessed by their titles, for example Fritz Schumacher’s ‘Small Is Beautiful’ (1993 [1973]) and Kirkpatrick Sale’s ‘Human Scale’ (1980). The costs of globalisation these analysts identify include: capital flight out of the margins; local economic conditions being determined by global forces, as witnessed by industrial relocation resulting in areas of economic decline, despite a wealth of local skills and labour, and work that needs to be done;  environmental degradation resulting from externalities such as global transport of goods, and lack of visible feedback mechanisms; erosion of local knowledge about environmental management; and an exclusive focus on the monetary economy at the expense of the environment and the unpaid social economy, the bedrocks upon which the conventional economy relies. In such cases, the argument for localisation is that more local control and decision-making power over economic, social and environmental conditions would improve quality of life. Simultaneously, the case is made that the material consumption which this economic growth provides does not significantly increase society’s well-being or life satisfaction. The conclusions drawn from both these observations is that  development should be reoriented towards promoting well-being rather than growth, and (Jacobs, 1984; Galtung, 1986; Douthwaite, 1996; Robertson, 1999; Henderson, 1995).

However, these theorists do not call for isolated self-sufficient communities; rather they employ the principle of subsidiarity in asserting that decisions should be made at lowest effective level, whether those decisions are economic, environmental or social (Ziman, 2003). It is certain that for many issues, such as railways, hospitals and education, regional, national and international coordination is required, but in the case of the environment, the most appropriate level for decision-making is not necessarily global – actions require very local decisions, especially in the case of individual  consumers and producers, albeit in a context of global environmental awareness. This strategy also embraces many positive aspects of globalisation – for instance popular international worker solidarity movements and consumer organisations have created global networks of activists, linking producers with consumers across the world to lessen the psychological ‘distance’ between them and foster supportive links (Brecher et al, 2000). At the same time, international environmental agreements and global sustainability conferences bring nations together to address issues outside the scope of national borders or laws. James Robertson describes this process as ‘evolution from today’s international economy to an ecologically sustainable, decentralizing, multi-level one-world economic system’ (Robertson, 1999:6). It calls for a new kind of citizenship of humanity as a whole, one which expands across borders (as does environmental change) and which recognises the political implications of private decisions and so defines everyday activities of consumption as potentially citizenly work. Dobson calls this ‘ecological citizenship’ (Dobson, 2003).

This is an equity-based understanding of environmental governance, drawing on ‘ecological footprinting’ methodology to define, visualise and address injustice. This technique calculates the area of ‘ecological space’ (of resources and pollution-absorbing capacity) taken up by individuals, cities and countries, and finds that the ecological footprint of the developed world is far larger than its geographical area – ie it uses a far greater proportion of the world’s resources than an equitable distribution (an equal per capita share of a fixed amount of environmental space) would suggest (Wackernagel and Rees, 1996). Sustainable consumption, for new economists, requires citizens and governments to take action to reduce the size of our ecological footprints to take up only a fair share of resources. This means cutting material consumption to levels which are globally equitable, and adjusting lifestyles to match – backing up calls from the new economists to re-orient economic policy to promote well-being rather than its current proxy, GDP (Shah and Marks, 2004).

In this model, key priorities are localisation, self-reliance, civic participation, embedded economic relations, building social capital and cohesion, and reducing ecological footprints through cutting material consumption. These in turn reduce environmental impacts, promote subsidiarity in environment decision-making and empower individuals – within a collective context – to build alternative systems of provision which are based upon different conceptions of wealth, progress, etc, and through these allow people to behave as ecological citizens. This paper considers one such alternative provisioning system, namely systems of exchange. Community currencies are one tool put forward by proponents of the new economics to achieve these aims. Before exploring community currencies in more detail, it is worthwhile examining precisely what it is about conventional systems of exchange that the new economists seek to replace.

To read further topics in this paper go to: http://bruce-conway.com/survivethenwo/noahs_archives/Barter_and_alt_currencies.pdf

Topics:
What’s Wrong With Mainstream Money?
Proposing Community Currencies
A Green Local Economy: Local Exchange Trading Schemes (LETS)
Spending Time Building Sustainable Communities: Time Banks
Rewarding Sustainable Consumption: NU Spaarpas

The paper concludes as follows:

CONCLUSIONS AND POLICY IMPLICATIONS

Community currencies have been put forward as a response to the failings of mainstream money – the conventional system of exchange – to promote sustainable consumption. They emerge from a new economics analysis which identifies socially-embedded local economies as potentially more sustainable forms of development. The preceding section of the paper described three distinct examples of community currency and assessed their effectiveness and potential to constitute alternative systems of exchange to favour sustainable consumption. The findings of this study are that community currencies are indeed fledgling attempts to build new social and economic institutions founded upon different values to mainstream systems of provision, with implications for environmental governance, sustainable consumption. The community currencies examined here are successful at overcoming each of the drawbacks of mainstream money discussed above, and building alternative exchange systems which answer the need for sustainable consumption. Specifically, they provide a medium of exchange which circulates alongside scarce national currency to provide new opportunities for economic activity; they are place-specific, retaining roots in local communities, and they are not mobile, which means they circulate within a given area and do not drain away, boosting local self-reliance; they can correct the misleading market signals offered by the conventional economy, allowing people to incorporate social and environmental factors into their valuations and purchasing decisions; and finally, they recapture ‘work’ from the formal economy and place it at the centre of a ‘whole systems’ approach to the economy, valuing and rewarding the development of social capital and active citizenship.

Community currencies are found to be prized channels for the expression of values which are squeezed out of the conventional economy, and demonstrate a deep-rooted desire for systems of provision and exchange based upon assumptions and priorities quite different to that of mainstream money. Furthermore, they answer the need for sustainable consumption at a fundamental level, by adjusting the incentives, structures and institutions within which society transacts and so re-orienting it towards new sustainability goals. They have emerged as grassroots responses to problems with mainstream money, and operate in a variety of contexts in developed countries, from neighbourhood friendship networks to city-wide savings cards. Community currencies are not a blanket cure-all for sustainability. Their individual success is dependent upon being locally-specific, adapted to particular local situations, social contexts and objectives of the initiatives, and while generalised models are available, they should be fine-tuned to the location and objective they are targeted at. While the scale of these examples is presently small, they have demonstrated that they do achieve their objectives and have the potential to achieve much more if scaled up and mainstreamed. Each of these case studies might be considered experimental prototypes for future multi-currency developments. They demonstrate that the existence of plural monetary infrastructures is possible, and is effective at enabling more sustainable consumption patterns, within the limits of scale as currently operationalised. In so doing, they point to possible future developments which might take these principles and evolve them into something embedded within daily life for millions of people, transforming society’s behaviour towards sustainable consumption and production principles.

These examples are suitable for local applications. Other types of currency could similarly be designed for other scales of circulation and function, resulting a multi-tiered variety of currencies, each designed for their role. For example, Bernard Lietaer, senior Central Bank executive in Belgium and designer of the European Currency Unit, projects from historical and current developments in money, to envisage a four-tiered monetary system in the future, where corporations and individuals deal with multiple currencies routinely – much as we do today with payment of air tickets in cash and air miles, for instance. The top level would be a ‘global reference currency’, one which is not tied to any nation state, and whose objective is to provide a stable and reliable reference currency for international trade. It is based upon a basket of standard internationally traded commodities such as gold, copper, wheat. Lietaer suggests that such a system might evolve from the range of competing international  corporate scrips, presently used for moneyless trade between firms: in the US, 400,000 businesses belong to nearly 700 barter exchanges, totalling $8.5 billion in cashless trade. This trade is growing at 15% a year, three times faster than dollar commercial exchange (Lietaer, 2001:291). The second layer of monetary systems would, in this model, comprise three multinational currencies, each used by a number of geographically-close countries – the NAFTA dollar, the Euro, and an ASEAN currency. The third layer is some remaining national currencies outside or alongside the multinational currency regions, with the difference from today that they no longer hold a monopoly over issuing money. The fourth layer of this model is local community currencies – local economic and social currencies such as the ones outlined in this paper to meet local needs and build social capital. Lietaer suggests these could expand their scale and influence as communities self-organise in response to the structural changes accompanying globalisation, and once a critical mass is reached, they would be widely adopted and exchanged through community internet clearing
houses (Lietaer, 2001). Together these could provide complementary tools which add up to a system of provision designed for sustainable consumption and development by rewriting the rules of exchange (Seyfang, 2000; Boyle, 2003; Robertson, 1999).

In order for this evolution to occur, a number of policy changes are required, the most fundamental of which is a shift in thinking and organisation, away from top-down command and control of the economy, and towards a more open, flexible, adaptable structure which allows experimentation and the spontaneous emergence of new exchange systems (Lietaer, 2001). First, governments need to recognise the benefits delivered by participation in community currencies as being valuable for local economies, communities and environments. This in itself would necessitate a rethinking of social policy and a redefinition of ‘work’ in order to cease the privileging of formal employment over all other types of work, and would also require policy to consider a whole systems approach to economic activity, and realigning economic policy to meet broader sets of objectives. Community currencies offer new infrastructure for income distribution, new pricing regimes and new economic rationalities which work in favour of sustainable consumption, for example by encouraging recycling and sharing, and enabling more local needs to be met with local resources. Second, other than where businesses are involved, this official recognition should not lead to treating community currency transactions as equivalent to conventional economic activity, with associated taxes, benefit restrictions, etc. Community currencies benefit those on the margins of society – those on low incomes and outside the labour market for whatever reason; it is perverse to penalise those very groups from  participating through social security benefit regulations, as we have already seen. Third, funding is needed to allow these projects to develop and grow over sustained periods, attracting broad cross-sections of members and becoming more familiar to the public at large. And finally, government should embrace the possibilities offered by community currencies to deliver public services more effectively and achieve policy objectives across a range of areas, using alternative exchange systems as a tool to get to places and motivations where mainstream money cannot reach.

For example, taking part in LETS can be valuable ‘occupational therapy’ for the unemployed, enabling them to learn new skills and develop confidence. Time banking and co-production are tools which could change the way we think about public service provision, resulting in participative and empowering genuine partnerships for health, education, and development. And the NU card could be used to boost recycling rates, cut congestion by promoting public transport, and support local businesses.

A key characteristic of resilience and adaptability is diversity. The challenges facing us across the globe demand action both to mitigate, and adapt to environmental, social and economic change. Arguably, a diverse range of systems of provision, extending beyond the confines of current mainstream institutions and into increasingly self-reliant and empowered communities, will prove the best defence against external shocks. The policy challenge now is to support those fledgling initiatives seeking to build new systems of provision, and enable them to grow, thrive and propagate alternative development goals and values alongside the familiar market infrastructure. Adopting time banks throughout the health service, or developing partnerships to introduce NU cards in cities throughout the country, would start a process of diversifying the systems of provision of money used, in favour of sustainable consumption.