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Why Local Matters, and Why It’s Inevitable

February 5, 2015

Below are the transcript and slides from a very short (~5 minute) presentation I gave at a recent Confluence Philanthropy gathering.

[slide 1]Thank you Dana for the invitation and introduction. I want to talk a little about why place-based investing is so important. But in order to do that, I need to take us back in time a bit.

[slide 2]Something remarkable happened a couple hundred years ago, though it’s doubtful that people recognized its importance at the time. We figured out how to use this stuff.

[slide 3]The industrial revolution utterly transformed how we lived, in ways that would have been unimaginable to 18th century Britons. When we think of the industrial revolution, we tend to think of technology. But the industrial revolution was really a fossil fuel revolution.

[slide 4]Before fossil fuels, societies were powered entirely by renewable resources: wood; wind; human and animal labor. We had global trade, agriculture, the arts and science, but once we discovered how to harness the power of fossil fuels it was like Bruce Banner turning into [slide 5] the Incredible Hulk. Why? Because the amount of dense, easily transportable energy stored in coal, oil, and natural gas was simply staggering. Let’s look at oil as an example.

[slide 6]One barrel of oil contains the energy equivalent of about 25,000 human labor hours.1 So it’s no wonder why we mechanized… well, everything.

[slide 7]Why farm like this… [slide 8] When we could farm like this? Why wait until June to eat blueberries when they can be grown and shipped to you for cheap from Mexico?

[slide 9]Why manufacture t-shirts in the U.S. where we grow our cotton, when we could more cheaply have them assembled piecemeal in three different continents before selling them for $4 at Wal-Mart?

[slide 10]Why build products to last when it’s cheaper and more profitable to design them to become obsolete and easily replaced?

[slide 11]Cheap fossil fuels allowed businesses to replace human labor with machines that could be much more productive, or with cheaper labor from overseas. And it helped consolidate wealth in the hands of corporations who were the most successful at being the most efficient.

[slide 12]As trade expanded, the US economy became more oriented around the financial and service sectors. Wages stagnated and the wealth gap grew.

[slide 13]And we’ve come to discover that fossil fuels aren’t so cheap, after all. For one thing, the days of cheap and easy oil, coal, and natural gas are gone. It’s why industry is blowing up mountains to get at coal, cutting down boreal forests to scrape and cook bitumen, fracking farm land, and drilling miles down in deep water.

[slide 14]These more extreme forms of energy production are not only more environmentally ruinous, they require much more capital. Again, let’s look at oil.

[slide 15]Right now, everyone’s talking about the huge drop in oil prices that took place over the last few months. But ignored is the reality that over the last eight years oil companies have had to spend 11% more annually on capital expenditures to gain less than 1% growth in crude oil production. The drop in oil prices means they can’t afford to invest as much in future production. The environmentalist in me thinks that’s great. But the energy realist in me recognizes how much our modern life is dependent on growing supplies of oil.

[slide 16]And our vulnerability to energy constraints isn’t the only cost of the fossil fuel age. Everyone in this room is aware that the global temperatures are rising as a consequence of the burning of fossil fuels. But our growing consumption of fossil fuels has put us on an unsustainable path nearly everywhere you look. Reversing these trends is not simply a moral obligation. It’s the task of the 21st Century. It’s the task of today.

[slide 17]So where does “local” fit in? Of course, “going local” doesn’t solve everything, particularly problems—like climate change—that are global in nature. But it is a critical strategy in reversing and responding to many of our environmental, energy, economic, and equity issues.

[slide 18]By growing local, renewable sources of energy we can both reduce greenhouse gas emissions and minimize the risks of energy supply or price shocks. By growing local, organic food production we can improve health, mitigate climate impacts, and build food security. By growing the local economy we can create true livelihoods, reduce our vulnerability to global supply shocks, put ownership in the hands of employees and communities, and address economic inequality.

And finally, by re-localizing the production of energy, food, goods and services, we can build resilience to inevitable shocks and put us on a path towards true sustainability – one in which we live within nature’s budget.

[slide 19]Going Local is not the end-all-be-all, but it’s certainly the place to start. Thank you.

1. One barrel of oil has 5.7 million BTU which translates to 1700kWh. The average human works at a power output of about 70W. If you multiply that by 8-9 hour workday you get about 6/10 kWh of work per day. If you divide 1700 by 0.6 you get 2833 days. Each work year is about 250 days so about 11 years of labor. The average American salary is ~$45,000 per year so 11 times $45,000 equals $500,000.

  • Neoagrarian

    Slide 13 should refer to ‘boreal’ forests, I think, not ‘arboreal’ forests! Oops! Otherwise, a clear, concise and important piece of messaging. For the life of me I don’t know why so many are simply cluelesss as to these obvious and evident relationships. And this the ‘INFORMATION AGE’! Nice job!

  • ashermiller

    Yikes! Thanks for catching that typo.

  • Neoagrarian

    No problem! Just another quick thought here brought to mind by the content of your presentation. It is by now profoundly evident that what got us in to this seemingly ‘wicked’ predicament revolves around the issue of scale. Take most historical ‘innovations’ – internal combustion engine, antibiotics, Haber-Bosch process, nuclear energy – they seemed like ‘good ideas’ at the time of their inception and initial deployment. But then the ‘technological determinism’ thing set in and most summarily agreed that we could not ‘go back’ to a ‘pre-X’ state of affairs. This much is obvious, or else we would all be bucking the trend and moving ourselves around on horse and buggy, for instance.

    So, here we find ourselves encapsulated in a wraparound world of total technologization, and it is finally dawning on us that we have an array of colossal and converging issues bearing down upon us. Yet we are immersed within entrenched systems of scale – even our minds and our collective consciousness seem only to be able to think in its terms. You say above

    “Of course, “going local” doesn’t solve everything, particularly problems—like climate change—that are global in nature.”

    I am coming around to the idea (epiphany, really!) that going local is the ONLY thing that stands a chance of ‘solving everything’, even climate change, if indeed it can by now be said to be ‘solvable’.

    Wendell Berry has been making this argument for a few decades now and damn it…I think he is right! From an essay entitled “Word and Flesh”, he wrote:

    “All public movements of thought quickly produce a language that works as a code, useless to the extent that it is abstract. It is readily evident, for example,
    that you can’t conduct a relationship with another person in terms of rhetoric
    of the civil rights movement or the women’s movement – as useful as those
    rhetorics may initially have been to personal relationships. The same is true of the environment movement. The favorite adjective of this movement now seems to be planetary.

    This word is used, properly enough, to refer to the interdependence of places, and to the recognition, which is desirable and growing, that no place on the earth can be completely healthy until all places are. But the word planetary also refers to an abstract anxiety or an abstract passion that is desperate and useless exactly to the extent that it is abstract. How, after all, can anybody – any particular body – do anything to heal a planet? Nobody can do anything to heal a planet. The suggestion that anybody could do so is preposterous.

    The heroes of abstraction keep galloping in on their white horses to save the planet — and they keep falling off in front of the grandstand. What we need,
    obviously, is a more intelligent – which is to say, a more accurate –
    description of the problem. The description of a problem as
    planetary arouses a motivation for which, of necessity, there is no employment.
    The adjective planetary describes a problem in such a way that it cannot be
    solved. In fact, though we now have serious problems nearly everywhere on the
    planet, we have no problem that can accurately be described as planetary.
    And, short of the total annihilation of the human race,
    there is no planetary solution. There are also no national, state, or country
    problems, and no national, state, or county solutions. That will-o’-the-wisp,
    the large-scale solution to the large-scale problem, which is so dear to
    governments, universities, and corporations, serves mostly to distract people
    from the small, private problems that they may, in fact, have the power to
    solve.

    The problems, if we describe them accurately, are all private and small. Or they are so initially. The problems are our lives.

    In the “developed” countries, at least, the large problems occur because all of us
    are living either partly wrong or almost entirely wrong.”

    Quite an argument for re-localization, wouldn’t you say?