Localised Economies: A Response to Globalization and ... - wotr

“CONNECTING THE DOTS”:
Evolving Practical Strategies for Climate Resilient Development
Localised Economies: A Response to Globalization and
Climate Change
Draft Paper for Discussion
Watershed Organisation Trust (WOTR)
www.wotr.org
2nd Floor, "The Forum", S.No. 63/2B, Padmawati Corner, Pune Satara road, Parvati Pune : 411 009
Phone: +91 20 24226211, email: info@wotr.org

The Premise – Globalization is a centralising juggernaut resulting in large-scale resource depletion in
remote eco-systems, massive divergent economic oscillations and widespread impacts of Climate
Change that impact the poor the most.
The Position – Localisation is the manifestation of a decentralised, democratised economy that
allows communities to develop frameworks for Climate Resilient Economies, and facilitates Adaptive
Sustainable Development
Introduction
Climate variability and its impact on rural livelihoods is a matter of great concern. A fragile natural
resource base and deteriorating environment hampers farm and off farm livelihoods.
Simultaneously, the constant flux in commodity prices poses a challenge for rural enterprises to
sustain their financial operations. Thus, along with climate change, rural livelihoods also are more
affected by economic upheavals and price fluctuations in a globalized world. This makes it
imperative to design livelihoods which could withstand climate variation and economic volatility at
the same time. While most of the geographical regions would be exposed to the impacts of climate
change some would be doubly exposed towards the risks of globalization and climate change. Since
most of the rural enterprises are dependent on non-local markets for procuring raw material, their
exposure and sensitivity towards non local market dynamics is high, making them vulnerable to risks
of globalization. A slight variation in price, demand or supply of materials could have substantial
impact on the operations of rural livelihoods. Thus, in context of the risk stemming from non-local
factors, there is a need to measure their economic vulnerability towards risks of globalization.
The Global Environment
Globalization refers to “the intensification of worldwide social relations which link distant localities
in such a way that local happenings are shaped by events occurring many miles away and vice versa 1
” The cause and effect are distant in time as well as space leading to large invisible delays from cause
to effect. These delays cause blindness which promotes unsustainable consumption patterns.
Earth’s resources are spread over large geographical areas, but they are not distributed equitably.
This creates a fundamental disequilibrium in the natural wealth of some geographic areas. However
since the beginning of industrialization humans activities have disturbed the natural distribution of
resources. Globalization has reduced this gap in distribution, accessibility and availability of
resources to an extent. The resources, energy, water, minerals, wood, food etc. have been
successfully traded and bartered across large spatial boundaries, but have arrived at a great cost:
Resource Depletion, Climate Variation and Economic disequilibrium.
1 Giddens (1990:64)
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The Indian Context 2
India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a
wide range of modern industries, and a multitude of services. Slightly more than half of the work
force is in agriculture, which accounts for about 18% of India’s GDP. Thus, it is only fair to say that
rural livelihoods are lopsided towards agriculture. Around 60% of the Indian agriculture is rain fed
and is dependent on the vagaries of monsoon. Thus, weather variations have profound impacts on
agriculture productivity. This in turn affects the income of all the farmers. A year of poor rainfall can
reduce the growth of Indian economy and GDP. Some of the sectoral challenges faced by agriculture
in the last decade or so are degradation of the natural resource base, increased vulnerability to
world commodity price volatility, rapid and widespread decline in groundwater table, land
fragmentation, indebtness of farmers, rain fed farming etc 3 . This has reduced their financial and
resource based adaptive capacities to a great extent.
Macro-Economic factors have profound implications for the rural economy. In FY 2010-11 NREGA
accounted for Rs. 40,000 4 crores of central expenditure on rural development. The scheme provided
employment to 4.39 crore rural households in 2011-12, offering village people 100 days of work in a
year with average daily wages of Rs. 120-200 5 . If inflation continues to rise and the rupee continues
to devalue, the purchasing power of rural people will go down. This will put added pressure on
NREGA to revise its wages upwards and increase the budget 6 . The agriculture and fertilizer subsidy
bills would also continue to rise. With an already soaring fiscal deficit this will pose immense
economic and development challenges for India.
Energy: India imports 85% of its oil 7 . This oil powers the extraction, production and transportation
of resources in the country. It allows food to travel to our houses, water to reach our taps, powers
the internet servers to connect to the world and powers our online banking transactions, connects
urban and rural landscapes to transfer resources, including food and water. Of every litre of
petrol/diesel/kerosene consumed in the country, 85% comes from outside and at a huge cost. India
has substantial amount of oil losses, financial losses incurred on sale of oil products by upstream and
downstream oil companies. Oil losses touched Rs. 1,37,000 8 crores in Fiscal 2011-12, which is the
highest on record. The fiscal deficit for FY 2011-12 stood at 5.9% 9 of GDP. With oil prices staying
above $100 a barrel, India will continue to incur losses on petroleum products and the fiscal deficit
shall continue to soar; the rupee would depreciate which would put further pressure on the trade
deficit and in turn on the fiscal deficit. India could very well get into a vicious cycle of rising deficits
which would hamper the economic growth. In such an uncertain macro-economic scenario, the rural
economy also becomes vulnerable. Inflation and cost push pressures would raise the cost of living,
2 CIA World Fact book, India Economy Overview, https://www.cia.gov/library/publications/the-world-
factbook/geos/in.html, accessed on 28-03-12
3 WOTR Position Paper on Agriculture, by Dipak Zade
4 http://en.wikipedia.org/wiki/Mahatma_Gandhi_National_Rural_Employment_Guarantee_Act#cite_note-1, accessed on
28-03-12
5 nrega.nic.in, accessed on 28-03-12
6 http://www.indiainfoline.com/Markets/News/NREGA-wages-to-be-linked-with-CPI-inflation/5092651795, accessed on
28-03-12
7 http://www.ppac.org.in/, accessed on 28-03-12
8 http://economictimes.indiatimes.com/news/news-by-industry/energy/oil-gas/budget-2012-hikes-cash-subsidy-for-state-owned-oilfirms/articleshow/12296718.cms,
accessed on 28-03-12
9 http://economictimes.indiatimes.com/news/economy/indicators/budget-2012-fiscal-deficit-numbers-could-have-negative-implication-forindias-sovereign-ratings-says-standard-poors/articleshow/12295733.cms,
accessed on 28-03-12
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especially for the poor who live hand to mouth. It could lead to higher personal borrowings and local
debt spirals.
The Pushes and Pulls in Livelihoods
With the promotion of education across the country, literacy rates are improving and with this is
comes changing aspirations. The current education system being the same for rural and urban areas
equalizes opportunities, yet as the quality of education is usually poor in the former, and the
curriculum distant from the reality of their lives, rural youth find themselves betwixt and between.
In a National Sample Survey Organization (NSSO) survey (2005), more than 40 per cent of farmers
expressed their bitterness with the agriculture occupation saying that if given a chance they would
like to quit farming. For the low incomes, high risk and insufficient gains compared to the effort
required make agriculture a very poor proposition. This lend support to the ‘push factor’ theory, the
growing disenchantment with the profession is a key factor operating behind increased withdrawal
or willingness to withdraw. A significant percentage of youth (34 per cent) were found to undertake
agricultural operations as a part-time activity, more popular with the small and medium landholding
classes 10 . Some youth would like their children to do farming not only because there of lack of
opportunities elsewhere but because that is what they had done for generations 11 . Meanwhile,
Manish Sabharwal, Chairman of Teamlease finds an ‘aspiration deficit’ as in their observations, not
many rural youth want to move out into city jobs. They do so when there is no option. Rural youth
want jobs nearer their villages, they prefer government salaried jobs, even as peon, security guard or
cleaner, despite the better pay package offered by private companies. Except for the youth from the
North-eastern states - because of their knowledge of English, they easily moved to city jobs 12 .
The biggest challenge we face today is to retain our youth in agriculture. And this is becoming more
uncertain with climate change. Unless farming becomes both intellectually stimulating and
economically rewarding, it will be difficult to attract or retain rural youth in farming (Swaminathan
2001) 13 .
A survey 14 revealed that a greater proportion of farmers in Bihar (51 per cent), Orissa (47 per cent)
and Jharkhand (47 per cent) expressed a desire to quit farming given other option vis-à-vis other
states, which were relatively better-off in terms of economic performance.
In WOTR’s own experience (in the last few years) of recruitment from Agriculture Universities and
other academic institutions (even rural development institutions), we find that almost all students
today prefer government postings and jobs in corporate houses, and only when unsuccessful, they
apply to NGOs.
The old Indian adage—Uttamkheti, madhyamvyapar, kanishthanaukri (best is agriculture, medium
business and lowermost service)—is totally reversed in today’s scenario 15 . Sabharwal proposes
10 NSSO 2005.‘Situation Assessment Survey of Farmers: Some Aspects of Farming’, 59 th Round, January–December 2003,
Ministry of Statistics and Programme Implementation, Government of India.
11 “The Changing Agriculture Demography of India: Evidence froma Rural Youth Perception Survey”, Amrita
Sharma,(International Journal of Rural Management, Jan2007,Vol 3:No.1 (pages 27-41)
12 Business Standard 10 th July 2008, “Why rural youth don’t want to migrate for jobs”
13 Swaminathan, M.S. 2001. ‘Shaping Our Agricultural Future’. Hindu, Thursday, 11 January.
14 NSSO. 2001. ‘Migration in India’, 55th round, July 1999–June 2000, Ministry of Statistics and Programme Implementation, Government of
India. 2005. ‘Situation Assessment Survey of Farmers: Some Aspects of Farming’, 59 th Round, January–December 2003, Ministry of Statistics
and Programme Implementation,Government of India.
15 “The Changing Agriculture Demography of India: Evidence froma Rural Youth Perception Survey”, Amrita
Sharma,(International Journal of Rural Management, Jan2007,Vol 3:No.1 (pages 27-41
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solutions ‘for a better life’ need to be found in the transit from farm-to-non-farm, unorganised-toorganised,
rural-to-urban, subsistence-to-self-employment-to-decent-wage-employment and
school-to-work 16 .
Response Framework
Localization
Localization of trade holds the key for designing a self-sufficient and locally governed economy.
Localization does not mean closing doors to the mainstream economy. Instead it is a well
orchestrated strategy developed using specific participatory tools that ensure that the local
economy on which community depends derives the benefits of growth and then amplifies the local
wealth generation. Local wealth includes not only money but also skills and education, social
cohesion, natural resources in form of ecosystem goods and services, and of course money.
Local Money Multiplier 17
Estimating local money flow of rural livelihoods can measure the local money multiplier, LM3 18 and
its effect on the local economy. The higher the local money multiplier, the better is the strength of
the local economy. More money staying within the community would increase their adaptive
capacity 19 to withstand economic upheavals and market fluctuations. On the contrary, if the majority
of the money is flowing out of the local economy, then it creates a leakage which would reduce their
adaptive capacity. Also, more money flowing out of the economy implies increased exposure to non
local goods and services, which in turn also increases their sensitivity 20 making them more
vulnerable. High sensitivity along with high exposure 21 results into high vulnerability 22 which in turn
reduces the adaptive capacity of the local community. If substantial amount of consumables are
manufactured locally and services are provided within the village, it would help reduce the risks
from macroeconomic oscillations 23 and also help counter the risks of inflationary cycles 24 .
Estimating local money multiplier is a methodology that can be used by the communities,
organizations, business leaders, or government officials to measure how much the organization, its
initiatives or its spending impacts the local economy. More importantly, it enables people to identify
where changes need to be made to improve that impact. Local money multiplier is a form of the
Keynesian multiplier, which has been used since the early 20th century to measure how income
enters an economy then circulates within it. The theory is that a change in income has a multiplied
impact on that economy and meaningfully retains the people at the base of the pyramid, especially
the rural youth.
16 th
Business Standard 10 July 2008, “Why rural youth don’t want to migrate for jobs”
17
http://wotr.org/upload/What-are-we-in-for.pdf.pdf, Paper on Estimating Local Money Multiplier of Rural Enterprises, pg
55
18
Local Money refers to the money circulating within the boundaries of the village. Multiplier herein refers to (Keynesian
economic theory) a factor that quantifies the change in total income as compared to the injection of capital deposits or
investments which originally fuelled the growth
19
Adaptive Capacity herein refers to the potential or capability of a system to adapt to (to alter to better suit) climatic and
economic stimuli or their effects or impacts (IPCC, Working Group II: Impacts, Adaptation and Vulnerability)
20
Affects the magnitude and/or rate of a climate related perturbation or stress, UNDP 2005
21
Degree of climate stress upon a particular unit of analysis; it may be represented as either long-term changes in climate
conditions, or by changes in climate variability, including the magnitude and frequency of extreme events, IPCC 2001
22
Vulnerability is a function of the character, magnitude, and rate of climate variation to which a system is exposed, its
sensitivity, and its adaptive capacity, IPCC TAR 2001
23
Boom Bust Cycles; Economic Growth and Contraction in a relatively short period of time
24
Rise and fall in prices of goods and services in an economy at certain time durations
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Tools and Methodologies
Strengthening local economies and livelihoods would need a set of tools. The tools will have to be
participatory in nature and be easy to use by the community. These tools will assess the current
state of the economy and ecosystem.
LM3 (Local Money Multiplier) will be the starting point which will tell us the strength of local
money flow and in turn the state of the economy. It will show us how much money is going
out of the village and how much is retained in the economy. It will also show us on what the
community is spending money and where is it all going. Thus, a list of goods and services
having higher financial leakages can be created using LM3 studies.
CASDAAT (Climate Adaptive Sustainable Development Assessment and Adjustment Tool):
Evolved from CRiSTAL, it is a participatory tool which helps assess the ecosystem services
and resources critical for their livelihoods based on the ‘5 capitals 25 ” approach and those
that are most sensitive to climate and market induced disasters. The resources are listed
based on their disaster impact ranking given by the community. It will give us a list of
resources critical for Livelihoods and their current state. Based on this a deeper
understanding of livelihood resource base can be created which will help us to devise
strategies for strengthening them.
Steady State Economy: Steady state systems have a self-regulating mechanism. When the
oscillations become divergent, they go beyond the normal limits and cause fever. This
creates a problem; that’s what is happening with our economy and environment - the
extremes are going past their historical averages. They cause surprise and often lead to
stress in form of extreme temperatures, sharp price spikes, extreme rainfall, economic boom
bust cycles, severe drought or flood etc. The system moves out of a Steady State.
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Herman Daly, the dean of ecological economics, defines a steady state economy as "an
economy with constant stocks of people and artefacts, maintained at some desired,
sufficient levels by low rates of maintenance throughput, that is, by the lowest feasible flows
of matter and energy from the first stage of production to the last stage of consumption.
"So a steady state economy aims for stability or mildly fluctuating levels in population and
consumption of energy and materials. To get a feel for how this works, consider a mature
forest. It does not grow in size, but it is a living system with a complex web of parts.
Remarkably diverse species cooperate and compete within the forest, and new species and
ecosystem functions develop over time.” 26
Dynamic Economic Thinking: Thinking in Stocks only, and ignoring what could be the most
crucial function for regeneration of resources – Flows, has led to a consumptive economy.
Stocks are snapshots; they show the state of the system at any given point of time. Like the
GDP of a Nation, Human Population, CO2 level in the atmosphere, amount of oil in the earth,
25 Natural, Financial, Social, Physical, Human
26 CASSE, Centre for Advancement of the Steady State Economy
6

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forest cover, number of species, etc. Stocks do not represent the shape or rate of change.
They are a moment in history.
Flows, by contrast, are rate based. They describe actions, and often show the future of
change, rather than a static state. They are the lead indicators of a system, like the rate of oil
production, rate of population growth and species extinction, growth rate of carbon
emissions etc. One can have a futuristic thinking by using not only stocks but flows and not
just flows but also stocks. A ratio of flows against stocks would give lead indication towards
the future state of the system. Like oil production/stock of oil, carbon emissions/carbon
sinks, tree cutting/tree cover etc. Thus, thinking in both stocks and flows is central towards
building a sustainable economic framework.
WOTR‘s experience with some of these tools
WOTR has conducted Local money multiplier studies and CASDAAT in its project villages in
Sangamner and Akole regions of Maharashtra. The LM3 scores revealed similar patterns across
villages despite the difference in their geographic locations and watershed profile. There were high
financial leakages in their economy - of their total income, nearly 90% was being spent outside the
local village boundaries in the initial three rounds of transactions and only 10% was being retained 27 .
This showed that the nature or behaviour of money flow is similar in most of the village economies.
Even in villages where watershed development has taken place, the local money flow is found to be
very low. It implies that post development even if the income levels improve, due to high financial
leakages, the money staying in the village is very low.
Agriculture forms the primary occupation for more than 75% of the households 28 and most of it is
rain-fed. Thus, their climate dependency for agriculture is high which makes them vulnerable to
climate variations.
While doing CASDAAT exercise a list of resources from the 5 capitals, were given by the community
based on their sensitivity towards climate risks and impacts. While doing an assessment of critical
livelihood resources agriculture featured as the most vulnerable livelihood due to its high
dependency on resources which were highly sensitive towards climate risk impacts.
Thus, based on the LM3 and CASDAAT studies it was clear that there was a felt need to strengthen
the local money flow of the villages and climate proof the resource base for livelihoods, mainly
agriculture. Also there is a felt need to diversify the livelihood opportunities in order to reduce
vulnerability. A diverse set of complementary livelihoods, farm and off farm based, will reduce their
27 LM3 Cluster Report – WOTR 2012
28 WOTR Baseline Data, 2010
7

dependency on a single source of income and in turn would increase their adaptive capacity. Linking
this with local markets and local production would help in creating higher local money flows and in
turn strengthen the local economy.
All project interventions should aim at increasing the above listed resources which will then in turn
strengthen the livelihoods. Thus, a healthy resource base and ecosystem is a precursor to developing
localised economies.
The Way Forward
Incentives for strengthening the resource base should be given to communities, especially to the
rural youth. Livelihoods derived from ecosystem services have a greater advantage since they come
free of cost. Livelihoods based on ecosystem restoration and conservation should be promoted.
Building ecosystem resilience and biodiversity will result in an increase in local opportunity and
choices of livelihoods for the rural economy.
The pro-poor livelihood response necessarily requires that the livelihood resources are provided at
greatly reduced costs. Traditional approaches call for subsidies – which then burden the government
at a cost to its fundamental function of provisioning for education, health, infrastructure etc. What is
not adequately appreciated is the fact that the ecosystem goods and services (with a potential to
become the livelihood resources) that a healthy and functioning ecosystem provides free of cost.
As a starting point the communities need to list those livelihood resources that are essential to the
existing and proposed livelihoods. These include resources from all the five capitals. Out of these
they select those which are vulnerable to climate change, globalisation or under threat from
corporate interests.
Finally the community strategizes how best they can protect and enhance these resources. The state
of these resources becomes a powerful indicator as well as motivator for action.
In order that the benefits of growth of financial capital are distributed widely throughout the
community it is important that LM3 is used as an indicator by the community to monitor the state of
its economy.
This would necessitate that diversity of the livelihoods that address the local needs is enhanced. This
would require efforts to enhance all five capitals. A needs analysis is carried out. This is followed by a
substitution matrix, where the products and services that come from outside, and which can be
profitably substituted are identified. The capacity building of young persons that includes skills
enhancement, access to capital and back-stopping support is provided.
Traditional artisans (Barah Balutedars) are given training and support to revive traditional skills and
these are re-oriented to cater to new and evolving needs of the communities. New age artisans
(technicians, “banjo” groups, pashusevaks, wasundharasewaks, form fillers, etc ) who can provide
service and support for relatively new gadgets, changing lifestyles and mindsets that are making
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inroads into the rural community are also trained.
Local Markets: The local economies would have their own intermediate markets servicing several
villages that form a cluster. They can be put up on a weekly basis and there could be some theme
bazaars, like markets for agri equipment, local spices, home furniture etc. One annual livelihoods
festival and melava should be celebrated. A serious and concerted effort is made to revive
traditional markets like Haats, Melas (local general and special fairs) and markets that cater to a
group of villages. An effort by rural youth to market and sell the rural produce in cities and small
towns would follow.
Seed Capital and Financing: Preferential credit at discounted rates should be given to livelihoods
having higher LM3 scores along with lean resource footprint. This will provide financial incentive to
entrepreneurs to redesign their businesses. A local revolving fund in the cluster should be created
funded by all the enterprises by way of 10% contribution from their annual revenues. This fund
should be used as seed capital for upcoming enterprises while the enterprises contributing towards
this venture fund become the shareholders. This would create a culture of co-operation instead of
competition amongst businesses.
Leveraging Government Schemes, Education and Human Capital: We need to develop structures
which will influence people’s behaviour in order to foster sustainable localization and adaptation.
These structures will be a set of policies, change in education and thinking which will create an
autonomous self-regulating local economy and ecosystem. The current Government schemes like
NREGA, NRLM etc. give income generating livelihoods to the villagers. This increases the exogenous
flow of money into the rural economy, but these schemes are not geared up to address what
happens to the money after it enters the village. Thus, we need to have measures which will ensure
that most of the money that comes into the economy through National schemes and missions
rotates within the local economy and creates widespread wealth before it flows out. Since the scale
of money involved in the schemes is large, we need to have a cluster of villages complementing each
other by way of diverse set of livelihoods which will cater to the scale of demand and spending.
In order to generate localized livelihoods we need to have appropriate human skillsets and capacity
building of local people. This can be done by proper education at all levels, i.e. primary, secondary,
college and also different forms of education, vocational, skill development etc. The current
education given to rural children and youth, make them unfit for rural livelihoods, mainly
agriculture. Also, what they learn is more oriented towards urban forms of occupations whereas
they have a land based and ecosystem based occupation lifestyle.
This leaves them stranded on the borders of villages and cities. A pool of talent and enthusiasm goes
underutilized and untapped. Local livelihoods and economy should and would look to capitalize on
them and create a sense of ownership and belongingness towards their village. If we can capacitate
them to meet their aspirations within the local economy in a cluster of villages then we stand a
greater chance of building sustainability of localization.
Meanwhile, large funds are invested by the government, banks, corporate houses and others to
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provide livelihood opportunities. In 2003 the then President of India Dr. A.P.J. Abdul Kalam
enunciated the idea of integrated development of villages leading to urbanization, and promoted a
mission for Provision of Urban Amenities in Rural Areas (PURA) through the provision of four
connectivities: physical, electronic and knowledge connectivity leading to economic connectivity of
rural areas 29 and with the support of Public-Private-Partnerships.
Today the MGNREGA (for 2012-2013 has allocated Rs. 33,000 crores) 30 ; the NRLM now called the
Aajeevika had Rs2914 crores allocated for 2011-2012 31 and there are various schemes for SHGs, the
BPL, etc. Besides, there are a lot of inputs going into natural resources rejuvenation, the agriculture
sector and others. While large sums flow into a village through these programs such as MGNREGS,
large amounts flow out as people purchase the majority of their needs from outside the village.
How can these funds be utilized that will adequately meet the food and water security required by
both rural and urban India, particularly as the adverse effects of climate change loom large over us?
How can the earnings be adequate (and secure) and the quality of life such, that will retain youth in
villages?
The Cluster Approach: In order to establish local markets and trade systems it is imperative to have
a reasonable scale of economy. Also, there are fair chances that the limited resource diversity of
individual villages may not suffice all their needs. Creating a cluster of villages with a convergent
vision is one of the strategies. This would work as a larger catchment for local entrepreneurs. Some
of the industrialized products may not be easily substitutable, hence the focus should also be on
non-local resource diversity i.e. diversity of goods and services available outside the cluster, from
near-by markets, wholesalers or manufacturers. This would increase the resource base and in turn
livelihood options. More livelihood options create more opportunity sets for the villagers. This in
turn improves their freedom of choice. Increased resource diversity of the cluster along with nearby
markets will also determine its carrying capacity i.e. the ability to produce and cater to the needs of
local population. Hence, the starting point for local economies is not demand estimation but
estimating its carrying capacity. This would help in avoiding exploitative economic production and
maintain sustainable harvest rates. Decentralized dependency on basic products work towards
enhancing local economies and simultaneously reduces the carbon footprint while providing a
balance of climate dependent and non-weather dependent livelihood options.
Governance: We need to develop structures which will influence people’s behaviour in order to
foster sustainable localization and adaptation. These structures will be a set of policies, change in
education and thinking which will create an autonomous self-regulating local economy and
ecosystem.
29 rural.nic.in/sites/pura.aspCached
30 Outcome Budget of Department of Rural Development2012-2013 Ministry of Rural development, Chapter 5, page no. 54.
Available at: http://rural.nic.in/sites/downloads/budget/Outcome_Budget_2012_13.pdf
31 Annex II pg 41
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Local bodies at village and cluster levels will govern the functioning of these cluster enterprises. The
business protocols, fair trade mechanisms and accounting systems would be evaluated and
monitored by them. There will be one cluster level body which will have one representative from
each village, while each village will have a local body for livelihoods. This will function like a hub and
spoke model where village level bodies will be a subset of the cluster level body.
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Annexure
A Model of Local Economy and Ecosystem
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markets near to the cluster
money spent on non local
procurement of goods and serv ices
f ixed consumers
non local income
Income
of Enterprises
f unding
new business initiativ es
Local Economy and Ecoy stem
Risk and Venture f und
retail sales
money spent on local procurement
of goods and serv ices
regeneration
haat bazaars
withdrawing
Ecosy stem Health
local household spending
Initial Capital of
New Businesses
f airs
degradation
intermediate
markets
local employ ment
consumption of
local raw materials
Source:Mihir Mathur, WOTR - 2012
Income
of Villagers
non local spending
non local
household income
markets near to the cluster

Figure 1 Dynamic Indicators
Components Conventional Thinking Dynamic Thinking
Energy Oil Production Oil Production/Oil Reserves
Rate of Production/Rate of
Consumption
Economics GDP Growth National Debt/National GDP
Rate of Debt growth/Rate of GDP
growth
Climate CO2 ppm levels in atmosphere Carbon emissions/Carbon Sinks
Rate of tree cutting/Rate of tree
generation
Population Population Growth New Born/Population
Doubling Times
Resources Silver Reserves Silver Production/Silver Reserves
Rate of Silver Consumption/Rate
of Silver Discovery
Source: Mihir Mathur, WOTR 2011
Figure 2 Local Livelihood Framework
All economic
transactions under
Fair Trade Mechanism
Source: Sushil Bajpai and Mihir Mathur, WOTR – 2009
Resource Mapping for Designing Sustainable Livelihoods
Need Analysis Gap in Demand
& Supply
Resource Analysis
Local
Village level
Cluster Based
Enterprise
Village Level
Franchisee
Watershed Organisation Trust (WOTR)
www.wotr.org
2nd Floor, "The Forum", S.No. 63/2B, Padmawati Corner, Pune Satara road, Parvati Pune : 411 009
Phone: +91 20 24226211, email: info@wotr.org
Local
Village level
Markets Close
to the Cluster
Wholesale
Markets
Non Local
Resources
Manufacturer