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Regional Economics Against Climate Change

by Norbert Rost Friday, Apr. 06, 2007 at 2:26 PM

Modern industrial society faces a dilemma. On one hand, people of industrial countries do not want to abandon their assets and habits or way of living. On the other hand, the climate problem ends up in destruction of humanity if emissions continue as in the past


A Green Analysis

By Norbert Rost

[This article published in the German-English cyber journal Telepolis 3/8/2007 is translated from the German on the World Wide Web,]

Greenpeace rates the year 2006 as successful despite record temperatures, threatened species and continuing climate change. Consciousness of climate change has arisen. In 2006, more media reports appeared on environmental problems than ever before. Al Gore’s “An Inconvenient truth,” a documentary film on this theme, was successful. Environmental problems must reach people directly before they reflect, it seems. This happened with the melting of the beloved ski areas…

The person causes the climate problem, science declares undisputedly. He does this through the emission of great quantities of carbon dioxide and other gases. These gases keep sunlight in the atmosphere and contribute to its warming. This phenomenon called the “greenhouse effect” is utilized consciously in agriculture. What has a positive effect in the greenhouse has massive negative effects in warming the whole planet: more powerful storms, floods and droughts, melting of polar ice caps and glaciers, undermining permafrost soil, rise of the sea level and so forth.


Climate change is caused by a warming of the atmosphere that on its side is triggered by higher emissions of gases. To lessen climate change, the emission of gases must be reduced.

What is the origin of the gases, especially carbon dioxide? The gases are brought into the atmosphere by economic activities of people, by burning fossil fuels in industrial plants and vehicles, by intensive livestock breeding and as waste products in industrial processes.

In addition, the person erodes forests as paper raw material and for pasture- and arable land that normally absorbs carbon dioxide as CO2 sinks so it disappears from the atmosphere. Thus the climate problem is closely connected with the human economy.


Modern industrial society faces a dilemma. On one hand, people of industrialized countries do not want to renounce their assets and their habits or way of living. On the other hand, the climate problem will end in the destruction of humanity if emissions continue as in the past. How should these seemingly incompatible problems be judged?

In addition, the lifestyle of industrial countries is a model for developing countries that for their part desire the same prosperity shown to them. Can the planet survive if the western way of life becomes the global standard?

These questions are raised reluctantly in industrialized society. The media rarely discuss the problematic exhaustively and individuals repress it – presumably because they do not feel able to constructively deal with the developments or cannot make an effective contribution as individuals.

Moreover the capitalist economic system according to all experience and academic theory is forced to growth to avert crises with mass unemployment and poverty. (1) Renunciation is desirable from an ecological perspective but disastrous from an economic vantage point. In Germany, the demand for economic growth is even anchored in the constitution.

How can we break out of this dilemma?


New completely different economic models can be designed that approximate an ideal economic system:

• Ecological, including the natural environment positively

• Crisis-free, free from unemployment, recessions and mass bankruptcies

• Just, free from unjust distribution of assets and income

• Fair, respecting human rights and the freedom of individuals

Visionary utopias are useful to stimulate the imagination and define strategic goals. However utopias are taboo. Realizable conversions must start from the present situation to gain acceptance in the population and with decision-makers.

Imaginable alternatives are essential for changing to an environmentally friendly economic system. Searching for alternative economic forms and spreading discoveries are vital. Building on this, others could gain courage to research and realize other alternatives.

In the following, an alternative economic form will be offered, its characteristics outlined and the necessary instruments described. This economic form can be understood as a proposal and possible way that must be elaborated in detail. This description does not claim to be complete or ideal. Nevertheless it is a vital expansion, completion and improvement of the current economic system – especially in positively integrating the environment.


Regional economics does not contradict the current spirit of the times of the global exchange of goods. Rather regionalization can be understood as a sensible completion of globalization since it includes many aspects into economic life that are lacking in capitalist economics. While the globalization process inspires large-scale rationalizations, regional economics promotes humanly friendly and environmentally friendly developments that are not inevitably globally competitive.


The environmental problematic should be emphasized right at the beginning. If economic actors are organized regionally and local resources utilized, transportation distances will be reduced. If a large part of the goods are produced where they are consumed instead of being produced on one side of the planet and consumed on another side, a great savings of transportation emissions could be realized.

If regional economics means accepting locally available resources, these resources become very important. How can a region survive if the local resources disappear? A regional economic organization anchors an environmental consciousness in an interesting way. Using their resources sparingly and developing new resources is imperative for egotistic-economic reasons in the interests of residents and for altruistic motives. Regenerative resources could be actively made available by cultivating a greater diversity of plants and seeking new uses for the available natural raw materials.

How can this regional economic mode be realized? The most important instrument for regional economics is money: regional money (regional currency). Since 2003, a number of regional European currencies have started that could be a basis for a regionally oriented economics.

Regional currencies could supplement the Euro as regional currencies with regional means of payment. These geographically restricted currencies have interesting effects. The following effects may be the most important:

Every return in the form of regional money is guaranteed to be spent n the same region where it is exchanged.

Regional money-purchasing power cannot flow out of its home region. Purchasing power is tied to the respective region. This has consequences. Every economic actor open for regional purchasing power must seek suppliers in the same region since he cannot spend the proceeds outside the region. This is also true for the suppliers. They must also seek regional business partners and if necessary change their supplier structures. Nearby business partners are preferred. Existing regional circulations are promoted and additional business connections arise. Transportation and work routes are reduced through the spatial proximity. Value-creation chains are extended through the dynamic of regional money. What can be produced in the region should be produced within the region – even if it was long imported from afar.

Beside the emission savings through shorter transportation routes, this restructuring of the economy would make the region more independent from the outside. The degree of self-supply increases and the basic provision of the population become more stable. Additional businesses and additional jobs will arise. Finally a new regio-market alongside the Euro-market could be available to the economic actors. Ultimately services and goods that were long imported will be offered regionally in the future. (2)

This kind of economic organization allows the forces of the free market (“market economy principle”) and expands entrepreneurial possibilities. Entrepreneurs have the choice of what currencies they will accept and what supplier services they will pay for in what currency. In addition, expansion of the currency area gives preference to the subsidiarity principle and a democratization of the monetary system since local actors can join in decisions about developing a regional money system.


Inclusion of the decentralized energy model is an ideal expansion of the regional idea. If a region is supplied with goods and services that it provides itself, shouldn’t this also be true for primary energy? Why should dependence on finite fossil sources of energy continue? An incentive system is created, regional sources of energy harnessed and a decentralized energy supply developed on the basis of biomass, solar technology, wind- and water energy and other renewable sources of energy through the use of regional currencies.

How can a regional currency as an incentive system encourage alternative forms of energy?

1. All economic actors need energy.

2. Regional money can only be spent regionally. Economic actors with regional money need regionally produced energy.

3. In most regions, energy is not produced through fossil sources of energy. Therefore the only possibility for producing regional energy is using locally available, regenerative sources of energy.

A regional currency relies on incentives in the economic system that encourages economic actors to develop a decentralized energy supply on the basis of regenerative energy.

Leaving the energy supply to the self-organization of regions promotes regional independence from finite sources of energy and helps replace the environmentally harmful “old” sources of energy with regenerative energy. A means of payment for guaranteeing the exchange between local energy producers and energy consumers could be feasible with regional currencies.

One problem for this approach is in technology. The necessary technologies must be ensured for the decentralized energy supply of every region. If monopolies exist in manufacturing solar cells or biomass power plants, the regional approach could fail for lack of technologies and machines.

Knowledge, especially about technological and organizational elements that can be integrated in regional thinking, must be available to local actors: medium technologies that are neither too large nor too small for the regional approach. (3) Suspending the protectionist patent system in favor of more open concepts should be probed.


Agriculture will have a greater role in a regionally oriented economy than today. Regionally- and biologically-oriented food will find a special niche in the regional market. The search for regionally available raw materials will have repercussions on farmers. Farmers will produce the future raw materials that grow on their fields (Recycling existing resources becomes more important where mining no longer contributes to the production of new raw materials). New local plants like hemp could be the basis for new regional industries.

The example of hemp shows how regional economics and regenerative raw materials can encourage innovative processes. Hemp is an annual plant that can grow up to 12 feet high nearly anywhere. For centuries, its long fibers were used in manufacturing fabrics and paper. Hemp represents an alternative to cutting down centuries-old forests or intensive chemical cotton cultivation. The oily seeds can be used as food or as the basis for regionally cultivated foods when pressed into oil. The plant remnants are suited as building material and as biomass for regional biomass power plants. The hemp sap is a raw material for regional pharmaceutical and chemical industries. (4)

In addition, technologies are developed under the motto “grow your house.” This project offers the South African population a sustainable regional development and also enables a reduction up to 90% in CO2 emissions in housing construction. Houses can be built that consist almost entirely of hemp. (5)


Regional economics emphasizes the human bond to a direct environment. The process of producing goods and services moves closer to people and becomes more transparent and open to influence. The names of regional currencies often closely tied to agricultural/geographic realities promote identification of people with their region.

The size of regions is oriented in economic realities. Orienting regional economics in cultural or agricultural natural possibilities is sensible. On the other hand, orientation in economic realities can be necessary according to the region. Including surrounding rural regions is necessary for supplying big cities like Berlin, Hamburg and Munich. Agriculture makes available food for the city and countryside.


• Nature also prefers locally available resources to distant resources. Plants find nourishment in their earthly realm and animals in their immediate surroundings

• Symbiotic connections between species in nature are comparable with the division of labor cooperation in the human economic system

• A diversity of species develops in nature according to local realities (different in the desert than in the Amazon). The cultural diversity of regions can be maintained in a regionally oriented economy.

In addition, regional economics recognizes that residents of the respective region have the first claim on local resources (e.g. South American primeval forest, oil in the Middle East).

Despite all small-scale organization, the regions are also part of a greater reality. Therefore the idea of a Europe of regions is offered as a (political) vision.


Changing the economic system is a necessary condition. However an improvement of the environment cannot be expected from this economic change alone. Whatever changes occur to our economic system, enlightenment of the population about the connections between human lifestyles and environmental damage is important. Every person must understand that his/her own lifestyle is jointly responsible for the development of the environment and that conduct is not without alternatives but reflects the decision of every individual: what one consumes, where one consumes and how one is engaged in his social environment.

Beside the strategy of controlling emissions that contribute to climate change, a second strategy should be developing CO2 sinks. “CO2 sinks” bind carbon dioxide (CO2) from the atmosphere. Every plant does this with growth. To grow, it needs carbon dioxide. Demands in which the population can participate directly should be promoted as accompanying measures. The greening of cities and villages spares the housing environment and also helps clean the air, bind carbon dioxide and isolate heat accumulations.

Since much solar energy is absorbed by human construction and transformed in heat, streets, houses and other structures contribute to the warming of the direct environment and the total global warming with buildings that absorb fewer rays of the sun.


Climate change follows a cause-effect chain: Transportation, industry, agriculture > emissions > warming > climate change

To slow down development, the human economic system must be changed so emissions are hindered. A regionally oriented economics approaches this ideal by reducing transportation. The use of regional currencies promotes the use of local resources. Through regional money, an incentive system could promote locally available, regenerative energy. In addition, building CO2 sinks should be prioritized and people enlightened about their individual responsibility for their environment.


[1] Siehe auch: B. Senf, "Der Nebel um das Geld", ISBN: 3879984352 ; D. Suhr, " Auf Arbeitslosigkeit programmierte Wirtschaft (1)"; N. Rost " Eine experimentelle Überprüfung der Aussagen der Freiwirtschaftslehre (2)", Diplomarbeit 2003

[2] siehe auch: N. Rost: " Regionalwährungen als wirtschaftsförderndes Anreizsystem in strukturschwachen Gebieten (3)"

[3] siehe: E.F. Schumacher "Die Rückkehr zum menschlichen Maß (small is beautiful)", ISBN 3930720701

[4] siehe auch: Sächsisches Landesamt für Umwelt und Geologie, Sächsisches Landesamt für Landwirtschaft: " Nachwachsende Rohstoffe (Hanf, Flachs, Salbei und Kamille) Ð Anbau und Bedeutung für den Lebensraum Acker in Sachsen (4)"

[5] siehe: " Hanfindustrie weltweit auf Expansionskurs (5)"


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