Regrowing local economies:
A Tale of Two Ecovillages

by Jonathan Dawson

Resisting the global economy is not an easy task. Buying locally produced food is a start. But going further than that  - using a local currency, generating energy locally, creating employment that serves the local community rather than the global corporations, requires a community to work together towards a common vision. Ecovillages are showing the way.
On the hill-sides overlooking the ecovillage of Torri Superiore in Liguria, Italy, the terraces are falling into dis-use.  Many of the olive trees are no longer pruned and tended.  Grass grows long over strips of earth that have been farmed intensively for centuries.  The rocks that hold back the terraces and prevent the soil from tumbling into the river far below are falling away, not to be replaced.  The ecovillagers of Torri own some of these strips and try to maintain them.  But the work is hard, they are few and the price they could get for the food they grow is so low that they cannot afford to get labour in.

Meanwhile, farmers in the low, earthen villages surrounding Bolgatanga in Ghana’s North-Eastern region are struggling to survive.  This used to be a major rice and cotton growing area, but today domestic production of these crops has all but stopped.  Locals have found it impossible to compete against the heavily subsidised imports coming in from the United States.  Moreover, as they, and other farmers like them across the global South, have increased their production of cash crops in order to repay large international debts, so output globally has grown and prices have dropped.  Between 1980 and 1997, the real price of sugar on international markets dropped by 73 per cent, coffee by 64 per cent, cocoa by 58 per cent, rice by 52 per cent, cotton by 43 per cent.

These two vignettes are being repeated across the world: small farmers North and South are being driven out of business by heavily subsidised foodstuffs, most of whose ‘externalised costs’ are not included in the price paid by the consumer, delivering benefits primarily to the corporations that produce and market them.   The costs of economic ‘progress’ are counted in terms of emptying landscapes, spreading slums and the loss of centuries-old skills.

Nor, of course, is this process limited to the production of food.  In just about every product market around the world, small producers using techniques and technologies adapted to small-scale production and the use of local materials are feeling the squeeze. 

There are, however, signs of growing awareness among the public of the multiple dangers entailed in the loss of small-scale, locally-based production systems.  This is reflected in the growth in popularity of farmers’ markets, community-supported agriculture schemes, credit unions, buy-local campaigns, fair trade link-ups, and other initiatives to win back some community control over the processes of production and consumption.

However, for the most part, these remain isolated initiatives: subscribers to organic box schemes, to give but one example, may have gone some way towards localising their food supply, but more than likely, in most other areas of their lives, they remain as dependent as ever on the global corporate economy.  For the individual, for the household, even for groups of households working in unison, this system is very hard to short-circuit.

For a community of several hundred or more, however, especially if that community has a shared vision of creating an alternative to the global economy, their chances of success are significantly increased.  And this is where the ecovillage model comes into its own as a laboratory for experimentation and innovation. 

Here, we tell the story of two European ecovillages, Damanhur in Italy and the Findhorn Foundation community in Scotland, that have consciously set out to reduce their dependence on the global corporate economy and to re-weave the web of a more complex, locally-based, social economy.  In an era where local shops, post offices, schools and other facilities are closing down in unprecedented numbers across Europe, both are experiencing substantial growth and diversification, opening new enterprises and generating new employment.  So, how are they achieving this and what lessons do these two experiments carry for more mainstream communities?

Findhorn and Damanhur have much in common.  Both started as very small initiatives in the highly distinctive historical moment that was the 1960s and early 1970s.  Both had, and continue to have, a strong spiritual focus to their activities.  Both located themselves in economically depressed and marginalised areas; Damanhur in the Valchiusella valley in the alpine foothills of Piedmont; Findhorn on the southern shores of the Moray Firth in northern Scotland.   Finally, both have experienced substantial growth in size over the decades: today, Damanhur is a federation of communities of more than 900 people, with many more supporters in the surrounding areas and indeed throughout Europe and the world; the Findhorn Foundation community is home to around 450 people, with an extended international family of friends and partners. 

What is immediately striking on entering both ecovillages is the tangible feeling of activity and vitality.  New buildings are being constructed, generally by companies owned by and employing community members.  There are bakeries, theatres, shops and cafés that draw in visitors from far and wide. Local, organic cheeses, wines (in the case of Damanhur only, alas!), fruit and vegetables combine great quality with very low food miles.  Crafts studios turn out beautiful ceramics, textiles, carvings and candles.  Schools and training centres for both children and adults are flourishing.  Publishing houses, printing presses, solar panels manufacturers, waste-water system designers, consulting companies……… everywhere, there is evidence of economic vitality and diversification.

If people living in an area cannot trade among themselves without using money issued by outsiders, their local economy will always be at the mercy of events elsewhere.  The first step is for any community aiming to become more self-reliant is therefore to establish its own currency system – Richard Douthwaite

At the heart of these success stories lies an astute understanding of the true nature of money and of how the rules that govern its movement can be managed so as to benefit the local economy. Money can be seen as playing a similar role within the economy as does blood in the body: a haemorrhage of either threatens the life of the system.  Most local economies in the West today are losing blood fast.  Recent research shows that up to 80% of the money entering North American Indian reservations leaves within 48 hours.  An extreme example no doubt, but it points to a wider tendency for money to leave local economies in favour of the bright lights of the city and international markets where short-term returns tend to be higher. 

Thus, relatively little of the money deposited in bank accounts returns in the form of loans to the areas that generated them, especially where those areas are economically depressed and marginalised.  Similarly, only a notoriously low proportion of the money spent in supermarkets and other chains that have come to dominate our town centres remains within the community.  And so, a vicious circle is set in motion: with limited local purchasing power and access to investment capital, locally-based producers find it hard to remain competitive; and as locally-produced goods become more and more difficult to find, consumers find themselves with little choice but to frequent the megastores.

Damanhur and Findhorn have found a dual response to this problem: to set up their own banks to retain their members’ savings within the community; and to create their own currencies so to keep money circulating locally.  Within Damanhur, the role of banker is taken on by the community’s real estate cooperative.  This body was created as a vehicle for investing the savings of community members in the purchase of land and the building of accommodation, workshop and office space for community members and businesses.  More recently, it has also come to play a role more akin to that of a mainstream bank, helping to identify business opportunities and providing loans and advice to community members that take them on.  At the end of every year, the real estate cooperative undertakes a study of the community economy, identifying which goods and services still need to be bought in from the outside and seeking to promote new community enterprises to fill these gaps. 

The Findhorn Foundation community has created Ekopia, a body with the status of an industrial provident society, to recycle locally the savings of its members.  Here, projects in need of investment are identified and share issues are raised against them.  Each investor has one voting share only irrespective of how much they invest, thus promoting a strongly communitarian ethic.  This has enabled the community to draw on the financial resources of both current members and the wider Findhorn family, many of who were previous members and all of who share the community’s vision to create a more self-reliant and low-impact human settlement.

Both communities have also created their own currency: the Credito in Damanhur and the Eko in Findhorn, each of which trades at parity with the national currency.  While all transactions within Damanhur are undertaken using Creditos, residents and visitors to Findhorn have a choice and most use both national and community currencies. In both communities, all goods and services – educational courses, building services, books, food, theatre tickets, printing, IT services, etc. – can be bought with the community currency.

The beauty of these currencies from the point of view of the community economy is that they can only be spent locally and thus remain available to community members wishing to trade with each other.  They are, in this sense, identical to Ithaca Hours, the currency system created by the social activist, Paul Glover, in the New York state town of Ithaca, in that they represent, in Paul’s words: ‘money with a boundary around it, so it stays in our community.  It doesn’t come to town, shake a few hands and then wander out across the globe.  It reinforces trading locally….they are untravellers’ cheques because you have to use them here – you cannot take them away’

So much for the theory.  To see how the system works in practice, let us look in a little more detail at the Findhorn community economy. The first of the share issues raised by Ekopia involved 220 individuals investing a total of £225,000 in a community-led buy-out of the community store, the Phoenix shop, that had previously been owned by the Findhorn Foundation. Share issues have also been raised to provide finance to the Findhorn Foundation (£100,000 has been raised) and the community educational facility, NewBold House (£25,000).  Further community-based projects to finance the purchase of new windmills and affordable, eco-friendly houses are in the pipeline.
This system delivers several benefits to the community.  Investors become co-owners of the businesses in which they buy shares, they gain a five per cent discount on all purchases in the Phoenix shop and a dividend reflecting the growth in the value of the business.  Ekopia calculates that together, these various benefits equal a return on an investment of one £500 share of £100 per annum compared to around £10 interest payments on £500 deposited in the bank.  Second, community businesses are able to draw on the monetary savings of community members without needing to pay commercial bank fees and interest rates to do so.  With bank interest rates at historically low levels, this factor is less important today than it is likely to be in the future; however, community businesses still make a saving of around £2,000 per annum on bank fees.

Meanwhile, the Eko was launched in 2001 with an initial issue of 18,500 Ekos and a second issue of 20,000 Ekos. It is estimated that the first issue of Ekos generated a turnover of £150,000 in the first year of the scheme, almost ten full spending cycles.  This is money that has stuck around, shaken plenty of hands and provided much valuable lubrication to the community economy. For sure, many of the products for sale within the community shop and other businesses originate outside the community and so money will necessarily leave the system to pay for them.  Nonetheless, the use of the Ekos has prevented a substantial leakage of purchasing power, making it much easier for genuinely local enterprises to emerge. 

Ekos are purchased from Ekopia with pounds sterling, one Eko to one pound, thus creating a loan fund for community businesses.  The first of these loans, to the Phoenix shop for the renovation of its crafts department, generated enough in interest payments to pay for the printing of the first issue of Eko notes and the purchase of a marquee for community gatherings. 

What is critically important is for a community to start putting all the pieces together in one place.  Then, and only then, can you begin to enjoy the synergies that occur when local ownership is linked with local production, local investing, local purchasing and local employment.’ - Michael Shuman

So, in summary, the creation of Ekopia and of the Ekos in the Findhorn Foundation community and of the real estate company and the Credito in Damanhur have gone some way towards setting up a virtuous circle in which everyone wins.  Investors gain more in terms of both financial returns and ownership of community businesses.  Businesses get access to credit at a cheaper rate than through the conventional banking system.  Expanding local businesses generate extra employment and purchasing power.  And more of that purchasing power remains within the community. 

Last, but far from least, though less easy to measure in purely economic terms, is the strong social dividend inherent in the strong feelings of ownership and participation felt by members of the community towards their own economy.  Decisions relating to consumption, investment and work cease to be made purely according to criteria of profit maximisation.  The divorce between head and heart that the current global economy enforces (whereby people often make consumer choices that they know to be socially or ecologically exploitative because they feel they have little choice) is, to some degree at least, overcome.  This ecovillage model thereby enables people to bring back into alignment their desire for justice and sustainability with their aspiration to live well and happily.  An important split in the soul of modern man begins to be healed.
For proof that the model works in practice, one need look no further than a 2002 study undertaken by the local enterprise company, Moray, Badenoch and Strathspey Enterprise, into the economic impact of the community on that of the north of Scotland.  This study calculated that the community generates 400 jobs and over £5 million pounds of business annually and commented on the value to the Scottish economy of the community’s diversification into economic activities beyond its original educational heartland.  Meanwhile, the Damanhurian economy goes from strength to strength, its latest expansion being the purchase of a former Olivetti factory located nearby, a metaphor, perhaps, for the evolution from a corporate to an ecovillage-based society. 

So what, if anything, do these experiments have to do with smallholders in Liguria and Ghana and with the crises being faced by local economies worldwide? They demonstrate that it is, in practice, possible for local communities to short-circuit the global economy and to take back a good measure of control over their own economic destinies.  They also suggest that at least three complementary elements need to be in place to permit them to do so.  First, there needs to be a strong, shared vision and community of interest within a defined population to engage with the task.  A population of around 200 people suggests itself as the minimum necessary to create an economic unit with sufficient diversity of enterprises and adequate purchasing power to make this viable. 

Second, leakages of monetary wealth out of the local economy need to be carefully identified and, to the degree possible, staunched.  And finally, following the observation of Michael Shuman, the success of the model appears to be dependent on the synergies that emerge when local investment is combined with local ownership, local production and local employment.  Converting the vicious cycle of today’s global economy that effects such a strong and divisive fracture within the human heart and mind into a virtuous and nourishing cycle will be no easy task.  Community-based action in an economics of solidarity is required.  The ecovillage movement has begun to develop interesting and strikingly effective models.  The next task is to transfer these out of the intentional community laboratory and into the wider society. 

Author: Jonathan Dawson is a resident member of the Findhorn Foundation in Scotland.

Source: This article first appeared in Resurgence. Reproduced with permission.
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