Session: Creating and Retaining Wealth: New ways of Approaching Economic Development, Slow Living Summit 2013, Brattleboro, VT
Thursday morning breakout session by Melissa Levy, Yellow Wood Associates
Summary by Elizabeth Mathai, who resides in Central Vermont. Her interests include mathematics, dance, and learning more about slow living.
Money may not grow on trees. Printing dollar bills is illegal (for most of us). However, one can enable the creation of wealth, as described in Melissa Levy’s presentation: “Creating and Retaining Wealth: New ways of Approaching Economic Development.”
“WealthWorks” is a new name for wealth creation in rural communities. Melissa Levy introduced it as a bridge between community development and economic development. Community development tends to be issue-based while conventional economic development is about creating jobs. Neither one, she says, takes a systems approach to development; neither one explicitly connects economic, social, and environmental conditions and opportunities. WealthWorks on the other hand is a wealth creation approach that links community assets with market demand resulting in lasting livelihoods. It creates wealth through interactions owned, controlled, and re-invested in place.
Two terms are frequently used in this new economic paradigm: Community Assets – underutilized community assets such as people, place, property, and know-how are brought to light and into productivity; Market Demand — what local people and businesses can do with higher return demand in their regions. Community assets and market demand weave together the self-interests of people and organizations in a region for mutual benefit. This in turn builds regional prosperity and self-reliance, helping to create livelihoods that last.
Levy explained that a “WealthWorks Value Chain” is a business model based on shared economic, social, and environmental values, wherein buyers, processors, producers, etc. work together for mutual benefit, thus creating value in response to market demand while also building community wealth. How does a WealthWorks Value Chain differ from a traditional supply chain?
WealthWorks vs. Traditional
1. Chain starts with consumer demand vs. producer supply
2. Success is measured by wealth created or retained vs. by net income
3. Everyone is in it together vs. for him/herself
4. The WWVC intentionally balances the mutual benefit of all in the chain vs. some power determining who gets paid how much for their role
5. All costs are considered and addressed vs. passing on costs to others within or outside the chain
6. WWVC’s try to influence policy to level the playing field and maximize long-term and widely shared wealth vs. trying to influence policy to create advantage and maximize short-term income
With such a wealth creation approach, opportunities for mutual benefit are openly shared and there is an intentional focus on building wealth. While considering demand for a product or service, it also looks at the demand for secondary benefits.
Melissa emphasized the key idea that wealth is not just money. Rather it is the stock of all assets (liabilities taken into account) that can contribute to the well being of people, places, or economies. She described seven different forms of community wealth:
- Intellectual capital – stock of knowledge, innovation, and creativity in the region
- Individual capital – stock of skills, and physical and mental healthiness of people in the region
- Natural capital – stock of unimpaired environmental assets in the region
- Built capital – stock of fully functioning constructed infrastructure
- Political capital – stock of power and goodwill held by individuals/groups that can be spent or shared to achieve desired ends
- Financial capital – stock of unencumbered monetary assets invested in other forms
- Social capital – stock of trust, relationships, and networks that support civil society
During the rest of the session Levy touched upon practical aspects of identifying opportunity sectors, exploring market potential, constructing a value chain, making wealth stick, roles for low-wealth people in such a value chain, and why this approach produces and sustains results. The session ended with an exercise for participants to explore and assess our individual strengths in order to learn which of the seven forms of wealth mentioned earlier each of us already has or could create.
Central Appalachia, Alabama Black Belt and Mid-South, Lower Rio Grande Valley region in Texas, are some of the regions where WealthWorks Value Chains are in place. The focus in these areas has been on renewable energy, energy efficient retrofits/ housing, food, forestry, community based tourism, etc. To learn more about these projects as well as obtain a host of other information see websites provided below.
Melissa Levy is a Senior Associate at Yellow Wood Associates, St.Albans, VT
She can be contacted at 802-524-6141 or firstname.lastname@example.org
More information may be obtained from:
This writer acknowledges extensive use of the presenter’s materials in creating this summary.