Can a Pound Ever Be More Than Just a Pound? Ben Reynolds Describes How Businesses Are Being Urged to Go Back to Basics to Boost the Economy While Making Wales a More Sustainable Nation
Byline: Ben Reynolds
It is a frequent misconception that a sustainable way of living is achievable by simply adopting some pro-environmental behaviours. Although being aware of the environment is at the heart of sustainability, it is not the sole factor that determines a sustainable approach.
When the word 'sustainability' pops up in conversation, people tend to automatically think of the environmental aspects, forgetting that sustainability covers a wider spectrum of areas including social and economic factors.
Our work takes into account this wider idea of sustainability. An important element of regeneration is to look at how money circulates within local economies.
Over the past 50 years, the growth of national (not to mention global) businesses and their presence competing in local domestic markets has meant that more and more money in local economies gets diverted away to centralised corporate operations.
This interception of funds starves local towns and cities of an important source of funds - re-circulated income.
The local multiplier effect (LME) describes how this income can benefit local economies if it is re-circulated locally. The term refers to how many times money is re-circulated within the local economy before leaving through the purchase of an import.
Imagine a hypothetical influx of money, say pounds 1m, entering a local economy. Now imagine that you could paint each pound of that money red and trace its progress.
Each time it changes hands, it is effectively a new pound to spend. And if each time it changes hands it is spent on local goods and services it is effectively being spent over and over again in the local economy.
The more that cycle happens, the more the value of each individual pound increases.
So, pounds 1m investment that was all re-spent at least 3 times, would be more like pounds 3m.
Alternatively, if you spend pounds 1m on an external contractor to deliver that service, who comes from abroad, or even another area of the UK, then that money has been spent once.
Some of it might be re-spent locally but there's a good chance that much of its benefit has immediately left the region.
In terms of changing behaviour, the maths isn't really that important, it's the concept of re-spending locally that is the key. …