Long-Term Economic Development Builds on Communities' Existing Assets

By Melissa Levy

Organizations like The Ford Foundation have found significant, measurable results reducing poverty through direct community action and careful impact tracking. The foundation developed a program called Wealth Creation in Rural Communities – Building Sustainable Livelihoods (now WealthWorks), which is documenting significant results on the ground in three of the highest poverty regions in the country – Central Appalachia, the Deep South, and the Lower Rio Grande Valley in Texas.

WealthWorks is a toolkit that can be used by any community to connect its assets, meet market demand and build livelihoods (my organization, Yellow Wood Associates, is on the management team.) These on-the-ground organizations work in different sectors, including agriculture, forestry, energy efficiency, biofuels, and green affordable housing, but share a common approach and commitment to long term results. A similar organization, the Mountain Association for Community Economic Development (MACED), in Appalachian Kentucky, promotes and implements energy efficiency in coal country. The results of their work show the potential broad benefits of this methodological approach to long term improvement.

WealthWorks is a regional approach to community and economic development, based on several years of research and practice in the field. WealthWorks value chains respond to market demand, involve significant communication and collaboration between the partners in the chain, and respond to values in the marketplace, while building sustainable livelihoods for people in a region. WealthWorks researchers and grantees consider the impacts of their work on eight forms of capital: individual, intellectual, social, built, natural, political, financial and cultural (full definitions of the 8 capitals as used in our work are available here).

Energy efficiency in Kentucky

MACED built a clean energy value chain in Kentucky coal country. They engaged electric utilities in building demand for energy efficiency by low-income people in the area. When MACED began their work, programs in Kentucky promoting energy efficiency for commercial and residential customers were underutilized and characterized by significant gaps in technical knowledge, lack of a qualified contractor base, and barriers to accessibility, especially for low-income families. MACED recognized the political, cultural, and economic importance of energy production and usage in eastern Kentucky, and especially the impacts of this production and consumption on low-income people.

Outcomes of MACED’s energy efficiency work

MACED’s clean energy value chain addressed energy efficiency issues through financing, innovative demonstration programs, and statewide policy work.

MACED engaged four rural electric cooperatives for feedback during the design process for the How$martKY program, using on-bill financing to increase access and uptake of residential energy efficiency retrofits. MACED helped the co-ops receive regulatory approval for the How$martKY program from Kentucky’s Public Service Commission. How$martKY allows families to access energy efficiency upgrades that save money and improve their homes, while paying for the work on their utility bills through the savings generated by the retrofits.

In two and a half years, How$martKY assessed 235 homes and completed 118 retrofits. These retrofits led to net annual savings of $71,605 and will save an estimated minimum of $1,074,075 throughout the term of the loan. Potential savings if the program is adopted at scale are an estimated $18 million. To date, this program has seen a total of $959,331 invested in the retrofits, with MACED providing $693,230 of that capital.

Following a successful How$martKY pilot phase, MACED helped their co-op partners file a rider with the Kentucky Public Service Commission requesting regulatory approval for the creation of a permanent tariff, which will, in effect, make How$martKY a permanent program. Approval was just granted last week. This approval represents a huge step forward, allowing the agency to expand and serve additional families. Immediate goals for an expanded program are to grow the number of co-ops from four to ten.

One hundred and twenty-five commercial retrofits were facilitated through MACED’s Energy Efficient Enterprises program, representing total investments of $3,597,758. These investments have supported 214 entrepreneurs, saved 24 jobs, and helped businesses save an annual $680,268, with projected savings during the next decade of nearly $7 million.

MACED has moved beyond its own walls to develop and anchor a diverse policy coalition of 55 organizations and small businesses to promote the passage of the Clean Energy Opportunity Act, which advocates for a renewable and efficiency portfolio standard in Kentucky. If implemented, the Clean Energy Opportunity Act would, over a decade, lead to more than 28,000 net new jobs above and beyond any jobs lost in the fossil fuels industry. It will potentially reduce average annual electricity bills 8-10 percent when compared to business as usual. And it will add $1.5 billion to the gross state product once fully implemented.

What organizations are working to improve sustainable livelihood outcomes in your communities?  How do they identify needs and address the barriers that exist for individuals and organizations trying to meet those needs? Do you know of other interesting programs that connect theory and practice for scalable results? 

Melissa Levy is a Senior Associate with Yellow Wood Associates, a Vermont-based consulting firm focused on rural community economic development. Melissa coaches organizations in how to implement the WealthWorks approach and how to measure impacts on multiple forms of wealth.