PROSPERING WITHOUT GROWING

Michael Kinsley

Residents of many growing towns and cities are learning the hard way that growth is not the solution to their economic woes. While they enjoy the benefits of growth, they are also vexed by the problems it causes: traffic congestion, crime, long commutes, air pollution, increasing intolerance, disrespect for traditional leadership, and increasingly cut-throat competition in local businesses. Rapid growth often causes higher rents, housing shortages, spiraling costs, and demands for higher wages to meet the higher cost of living.

Communities tolerate these side effects in hopes of capturing growth benefits. But some perceived benefits are illusory.

A sound economy requires development, that is, vigorous enterprise and a decent standard of living. But it doesn't necessarily require growth, that is, expanded community size. A community might be compared to a human being. Human growth after maturity becomes cancer. When a town continues to grow after maturity, its cancer is manifest in many ways-higher taxes, environmental degradation, spiteful controversy, and loss of a sense of community.

But true development is quite different from growth. After reaching physical maturity, humans continue to develop in many beneficial and interesting ways-learning new skills, discovering new interests and enterprises, and gaining deeper wisdom. Similarly, a community can develop itself without expanding. It can reduce costs, create jobs and affordable housing, enhance cultural and educational opportunities, and improve health and public safety.

Even growth advocates are getting burned by growth. For instance, residents of Cripple Creek, Colorado, spent a lot of personal time and money to bring gambling-one current economic development fad-to their town. Their success quickly led to dismay as the growth effects of gambling increased their taxes. Though gambling brought substantial new revenues, it required expensive new infrastructure that was paid for by all property owners. Now many established businesses can't afford tap fees for new water lines. Some residents feel compelled by increasing costs to leave their own community.

There are plenty of ways to develop an economy without growth. For instance, import replacement is a powerful means that is little used. It means producing locally what had previously been purchased from outside the community. Two excellent ways to reduce imports are supporting existing businesses and plugging the unnecessary leakage of dollars and resources from the community. These efficiency measures increase the number of times a dollar is spent in the community, thereby increasing local wealth.

Osage, Iowa discovered a way to develop its economy without growing. The community plugged its energy leaks and is now saving nearly $1,000 per family per year. Money that had been spent out of town to buy gas and electricity has become, in effect, tax-free income. A total of $1.2 million now stays in Osage each year. Much of it recirculates in the economy, strengthening local businesses without growing community size.

Researchers for Rocky Mountain Institute have found scores of examples of communities that curtailed leaks in their local economies. By becoming more efficient, these communities have improved the bottom line by plugging leaks in the local economy. Using the lessons from these community endeavors, the Institute's Renewal Team assists growing towns to develop their economy without growing-by building capacity for sustainable development.

A former commissioner for Pitkin County, CO, Michael J Kinsley is the co-founder of the Economic renewal program at Rocky Mountain Institute. This article is adapted from "Paying for Growth, Prospering from Development" available from PMI, 970-927-3807 or www.rmi.org