Regenerating Regional Economies: Vermont as a Model

I have spent my career “thinking globally and acting locally” by building and helping to launch businesses like Gardener’s Supply, Intervale Center, Seventh Generation, Living Technologies, and Carbon Harvest Energy. But the more I become aware of the Planet’s economic, environmental, and social challenges the more I am compelled to support solutions on a scale larger than local business. I now believe we have no choice but to shift to a new national and global economy, a more sustainable economy, a greener economy. A greener economy is not where crime and pollution are reported as economic positives by Gross Domestic Product measurements. It is where we create policies and enterprises that heal and restore the environment and increase well-being of communities and people.
 
Gus Speth recognizes that we need a new approach to economics and ecology, as he made clear in his 2010 lecture, “A New American Environmentalism and the New Economy.” Gus wrote:
We must create a green economy—an economy that protects and restores the environment, one that lives off nature’s income while preserving and enhancing natural capital…. But the new environmentalism will not get far if it is focused only on greening the economy, as important as that is…. The failure of the old economy is evident in a threefold economic, social, and environmental crisis…. These…crises are linked, powerfully linked. They cannot be dealt with separately…. So, we see that the new economy—the prime objective of the new environmentalism—must be about more than green.…We need to answer the probing question: What’s the economy for anyhow? The answer, I believe, is that we should be building what I would call a “sustaining economy”—one that gives top, over-riding priority to sustaining both human and natural communities.
 
Gus continues: “One of the most remarkable and yet under-noticed things going on in our country today is the proliferation of innovative models of ‘local, living’ economies, sustainable communities and transition towns and for-benefit businesses which prioritize community and environment over profit and growth.… A new Fourth Sector is emerging, bringing together the best of the private sector, the not-for-profit NGOs, and government. The seeds of the new economy are already being planted across our land.”
 
Many of us in Vermont are working to advance this “Fourth Sector” through stronger “local, living” economies that balance economic, environmental, and social-equity needs for broad and lasting change. And, as I will explain, the New Economics Institute, through work done by the New Economics Foundation in the United Kingdom and the Ford Foundation in the United States, has access to proven models and methodologies to accelerate this system-change work, perhaps with Vermont as a paradigm-shifting model to lead the way.
 
We in Vermont are proud of our three elected representatives in Washington. Though we have few elected representatives in Washington, no state has more sway than Vermont over the advancement of a new economy the purpose of which, Gus Speth (a part-time Vermonter) suggests, is to achieve a “sustaining economy.” And our most influential DC representative is the third-most senior member of the U.S. Senate, Patrick Leahy. Here are some words from Senator Leahy offered as encouragement to our gathering today:
It is clear to me that we must work together to “regenerate” our economy. Our economy can be grounded in creative knowledge-based enterprises and high-technology companies which build upon our existing strengths while pushing to lower our energy needs and carbon emissions.  Our businesses and homes can be nestled in our productive working landscape where innovation can revitalize our rural economies with sustainably produced food and energy products sold into our local and regional economies.  By investing in our communities we can maintain a quality of life that will help support our new economic base while allowing us to live our lives and raise our families in a place we want to call home.
 
As all of you associated with the New Economics Institute know, this work of building a regenerative economy will not be easy or quick. Nevertheless, in Vermont we are committed to creating incomes from the new economy while building a financially and ecologically sustainable society where we fulfill our highest moral obligation to our children and their children to leave them a world as good, or better than, the one we inherited.
 
As Gus Speth indicates, “to build the new economy we need innovative economic thinking and new models.” Senator Leahy believes Vermont can serve that purpose. He is offering to work with the New Economics Institute, perhaps at an annual gathering (maybe a “Vermont Communities and New Economy Congress?”) convened to make widely known the opportunities for moving toward a “regenerative” economy and the challenges involved. The Senator recognizes that the current system—which concentrates wealth, depletes communities, and exhausts the environment—will not relinquish control easily and that the new economy must emphasize human well-being while measuring the environmental costs of pursuing economic goals. He is offering his good offices to advance Vermont as a model for transitioning to a new economy.
 
Senator Leahy has the unique stature in Vermont to be able to create a tent large enough for all political and economic perspectives to enter and seek new solutions to old problems. He has been instrumental for 36 years in strengthening key building blocks in Vermont for a new economy, such as:
·      local, organic, and value-added agriculture that helps keep rural landscapes productive;
·      renewable and decentralized sources of energy;
·      healthy downtowns and community centers;
·      infrastructure and initiatives necessary to create a knowledge industry and to compete in the global market economy;
·      leadership in the creative economy including green architecture, sustainable design, arts, music, software, and new media.
 
Much is already happening in Vermont to prepare the way for large-scale system change. We are a small test tube, but we provide a good petri dish for national economic policy innovations. Consider these six:
1. Food system change. In 2009 the Vermont Legislature funded Farm-to-Plate, a statewide systems-based and action-oriented process to reinvent VT’s food and farming system with the goal that 10% of all food consumed by Vermonters will be produced locally (VT + 30 miles), getting to 20% if the entire region works together (New England, New York, southern Quebec).
2. Climate change and energy policy. The VT Governor’s Commission on Climate Change was established in 2005 and targeted reducing Vermont’s greenhouse gas emissions 75% from 1990 levels by 2050. The Commission’s top recommendations were guided by a smart two-part strategy. First, reduce emissions through energy efficiency by building on Efficiency Vermont, our energy efficiency utility that has become a national model, and by unleashing our renewable energy potential. In 2009 Vermont became the first U.S. state to adopt a full system of renewable energy feed-in tariffs that establishes minimum rates to be paid by electric customers for various renewable sources in long-term fixed-price contacts. And second, Vermont recognizes the need to invest in our “Green Bank” of healthy farms and forests as they play a central role in curbing our greenhouse gas emissions through capturing and storing CO2 in productive landscapes.
3. Health-care system change. Last month the VT Legislature enacted the Health Care Financing and Universal Access law that brings Vermont closer than any state to a health care system with universal access, reduced costs, and a higher quality of care.
4. Business leadership and corporate reform. Vermont Businesses for Social Responsibility, 20 years old and with 1,200 members, is the largest state-wide organization of its type in the nation. In 2009 the VT Legislature authorized low-profit limited liability corporations, and last month Vermont was the second state to adopt “benefit” corporation legislation, which evaluates companies on social, environmental, and workplace criteria, not just on return to shareholders.
5. Measuring and Advancing What Matters. Gross Domestic Product measures what happens in the market economy. It is not a good measure of human and ecological well-being. Other systems are much better, like New Economics Foundation’s Happy Planet Index and the Genuine Progress Indicator. GPI aims to measure and distinguish between worthwhile economic growth and growth that reduces wellbeing. While U.S. GDP has steadily increased since 1950, GPI peaked in about 1975 and has been gradually decreasing ever since—a 35-year recession in well-being! The Gund Institute of Ecological Economics at the University of Vermont recently estimated the GPI of the State of Vermont for 1975-2000 and found that GPI per capita had increased over the entire period and is now more than double the national average. This was because VT protected and enhanced its natural, human, and social assets.
6. Institutionalizing “Fourth Sector” innovation. I was a founding board member of the VT Sustainable Jobs Fund, an NGO that operates in partnership with State government, foundations, and the private sector. VSJF was authorized by the Vermont Legislature in 1995 to meet the economic needs of its citizens by accelerating the greening of the VT economy, promoting social equity, and practicing stewardship of its natural, built, and cultural environments. Wayne Fawbush, who was the long-time Executive Director of VSJF, tested components of the Ford Foundation’s new systematic approach to “Wealth Creation in Rural Communities” in VT before moving to Ford. This flexible methodology aims to build genuine wealth that “sticks” even in low-income rural areas. It encourages flexible and adaptable strategies that emphasize the rural/urban connection and elevates a shared understanding of what rural areas bring to the rest of society.
 
In Vermont, however, we still do not have a unifying understanding and framework for how all these advancements can add up to a new “sustaining economy.”   That is the opportunity Vermont may offer as a new economics poster child. Let’s imagine that the VT potential for modeling economic system change and innovation might be catalyzed with help from the New Economics Institute. We could include:
·      measuring progress with a more local version of the global Happy Planet Index;
·      testing, adapting, and deploying new local sustainable wealth-creation systems;
·      creating new mechanisms and institutions to invest for sustainability—targeting, for example, new transportation infrastructure, food and energy infrastructure, working landscapes;
·      building interdependence through reciprocal links regionally and in New England.
 
And let’s assume Senator Leahy will support such a process for the next six years of his 7th term in the Senate, using the VT tradition of civic engagement and town meetings. I believe we can engage successfully in this process the private sector, NGOs, and all levels of government in a “fourth sector” process, thus achieving broad and long-term buy-in and change for Vermont, for our region, and as a new national model for a sustaining economy.
 

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