Economic impacts of community-led initiatives

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Community-led initiatives are experimenting with economic innovations and grounding them at the local level, with preliminary research suggesting positive impacts, including creating new goods and services that better respond to local needs. Community-led initiatives create direct and indirect employment and provide financial benefits to participants and their communities. At the local level, there is a demonstrated tendency both to generate wealth (of more than eighteen thousands euros a year) and reduce economic leakage (at the order of magnitude of sixteen thousand a year).

Economic Impacts of Community-Led Initiatives

Data from the TESS research project indicate that CLIs have the following impacts:[1]

  • Tangible
    • job and enterprise creation
    • goods and services available and/or accessible and more affordable for their participants
    • awareness raising
    • educational activities
    • greenhouse gas emission reduction
    • revitalize local economy, promoting circular economy
    • create new local investment opportunities
    • Improve nearby land and house values
    • generate additional tax revenues
    • work as business incubators
    • market-oriented innovation
  • Intangible
    • creation of long-term social capital and empowerment of local communities
    • improvement in health and wellbeing
    • strengthening networks
    • skill development
    • change local wealth distribution

Economic Aspirations of Community-Led Initiatives

Based on research on more than 60 CLIs in Europe, the TESS project identified the following economic motivations:[1]

  • drive economic regeneration
  • create job opportunities and explore alternative ways of working
  • financing and organising enterprises
  • exploring more resilient economies
  • explore economies not based on money, which can include:
    • voluntary work
    • gift economy
    • time banks
  • wellbeing
  • social capital and community empowerment
  • improve environmental systems

The majority did consider that their economical aims are relevant (71%) and should benefit directly participants (76%), promote financial sustainability and organisational effectiveness (73%) and improve local economy (65%).[2][1] CLI perceptions about the achievement of their economic motivations allows to understand that 15% considers they full revitalised the local/community economy, while nearly half (47.5%) of them felt they almost achieved and 25% considered that this goal was somewhat achieved.[1]

Job Creation

More than half of the CLIs studied in the TESS project (59%) did report direct or indirect creation of jobs, with one reaching 320 employees. Nearly 15% created at least 10 jobs and most created at least somepart-time employment. One third of all employment created is indirect, meaning that people are not hired by the CLI itself, but their job is created as a direct consequence of the its activity. on average, CLIs studied in TESS created nearly eight direct jobs and just over three indirect jobs per initiative. A pooled analysis estimates that each CLI created an average of 0.7 Full Time Equivalent jobs.[1]

Financial Benefits for Members and Communities

Data from the TESS project indicates that through provision of goods (such as food) and services (such as transport and energy) at more affordable prices (or for free), and by promoting reuse, repair and upcycling, CLIs can generate financial savings for members averaging nearly 132€ a year per person. Nearly 21% of the initiatives studied provide a benefit of up to 50€, 8% between 50€ and 100€, 16% between 100€ and 500€ and 3% provide a benefit of 500€ or more.[1]

Calculating across case studies, TESS concluded all that CLIs promote a median of 18.740€ of annual wealth generation and 16.734€ of increased retention of funds in local economies per year. Due to the preliminary nature of the data, TESS considers it likely that these figures are considerable underestimates.[1]

Potential Negative Impacts of CLI

Several authors do consider several potential negative indirect effects of CLIs' activities, including:

  • new forms of enclosure and (ecological) gentrification, such as potential raising house value or cost of services, affecting negatively low-income residents[3][4]
  • negative economic impacts on local retailers

Economic Innovations

Innovating at the local level can mean experimenting an existing product or service in a place where it was absent, provide a new vision or attitude towards tradicional services or products, or really creating disruptive, transformative, complementary or alternative goods, services or market segments not known.

Around 76% of nearly 60 CLIs in Europe surveyed in the TESS project aim at creating or diffusion economic innovation by offering new goods and services that respond to local needs.[1] After verification, the TESS consortium realised that "nearly 21% of the studied CBIs did actually introduce radical new goods and services (market formation), 25.0% introduced innovations created by someone else (“Experimentation”), and 17.0% achieved both at the same time: they were able to create some sort of new market as well as experiment or test innovations produced by others."[1]

CLI - Innovation sub-systems (TESS D4.1, 2016).png [1]

According to TESS research, those most commonly observed in European CLIs include:[1],

  • new and sustainable materials to generate heat;
  • new solutions for purchasing sustainable energy,
  • innovative ways to ensure the access to local, organic and sustainable food, to manage its distribution,
  • alternatives money for exchanging goods (including Local currencies)
  • new sustainable transport solutions and local infrastructures

CLIs in northern European countries (UK, Finland and Germany) consider that this innovation is at the core of their aims, while in the southern European countries (such as Italy and Romania) considered in the TESS project, fewer than half reported this to be the case.[1]

Registration of patents is not a common practice or a goal achieved by CLIs, reported in only one out of 51 responding initiatives with several respondents reporting that they considered patents unsuitable for a community-based approach.[1]


  1. 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 Celata, F., Hendrickson, C., 2016. Case study integration report (TESS Project Deliverable No. 4.1)
  2. Hof, A., A. Holsten & H. Berg, 2016. Sustainability Transitions to Low Carbon Societies - TESS, ARTS & PATHWAYS Common Policy Brief.
  3. Dooling, S., 2009. Ecological Gentrification: A Research Agenda Exploring Justice in the City. International Journal of Urban and Regional Research 33(3): 621–639.
  4. Tornaghi, C., 2014. Critical Geography of Urban Agriculture. Progress in Human Geography 38(4):551–67. doi: 10.1177/0309132513512542.