Local eco-money for solving environmental problems? - “Take pumpkin exports as an example.” 2002.02 (91)

1. “Three Relationships Between Global Environmental Problems and the Economy”

The main causes of global environmental problems include population growth, economic disparity between North and South, expanding financial markets, the evolution of material civilization, the gap between nations, the capitalist system, and international domestic laws. As a result, phenomena such as desertification, global warming, deforestation and other natural resource depletion, ocean pollution, air, water and soil contamination, ozone layer depletion, and abnormal weather are occurring.

2. Global Environment → Economy

These global environmental problems naturally have a major impact on the economy. For example, abnormal weather, whether it is a cool summer or an extremely hot summer, can cause major damage to crop harvests and lead to a sharp rise in the price of grains. This is a major economic problem, which becomes even more apparent when grain production is concentrated in North America, as is the case today.

3. Economy → Global Environment

However, the relationship between the global environment and the economy is not simple. Not only do environmental issues have a major impact on the economy, but the economy also affects the global environment. An example of this is the case of the rich northern countries that are expropriating the natural resources of the southern countries. Northern countries continue to purchase food, forest resources, oil and natural gas, etc. from southern countries with huge amounts of money.

4. “Limits to Economic Growth.”

It is said that it is a chicken and egg relationship: while global environmental problems affect the economy, the economy also affects global environmental problems, and this interaction has spiraled up to the point where, at the current stage, future economic growth is limited without consideration for the global environment. Therefore, the term “how to achieve sustainable growth” is of great significance.

One useful measure to achieve sustainable growth is, for example, not to fix the global food factory in a region from a global perspective, as in the case of grain production mentioned earlier. The idea is to respect the uniqueness of each region and increase food self-sufficiency. In addition to this, a number of other measures for sustainable growth are being attempted, but regional money seems to be a quite effective way to overcome the current situation.

5.  “The Importance of Local Money”

It is generally said that “when there is only one currency in circulation, the local economies that make up the economic zone tend to atrophy. The current financial situation is also referred to as unipolar domination by the dollar, resulting in extreme concentration of wealth. The North-South problem of abundance in the North and poverty in the South has been an issue for some time, but there is no prospect for improvement, and in fact, the disparity tends to widen. The dollar accounts for 65% of foreign currency reserves, 40% as an investment currency, 42% as a trading currency in the foreign exchange market, and 48% in world trade, so unipolar domination may be an exaggeration. However, even though the share of currencies other than the dollar is diversified, it can still be said to be dollar-oriented. Let us consider the implications of this single currency and regional atrophy.

6. “Take pumpkin exports as an example.”

To simplify the explanation, let us assume that there are two countries, A and B. Country A produces pumpkins and country B consumes them. Let us also assume that country A produces nothing but pumpkins and that all consumption in country A depends on country B. Country A harvests 100 kg of pumpkins and receives 1,000,000 yen. However, this 1,000,000 yen is for the cost of growing the pumpkins for consumption for the next year and for the inhabitants of Country A to live on. Under certain conditions, all of this 1 million yen is used to import consumable goods from Country B, and the entire amount is paid to Country A as payment for the purchase of consumable goods. Since this example is based on the condition that all consumption is dependent on Country B, it may not be so extreme in practice, but it can generally be said that as consumption in Country B increases, so does the dependence of consumption on Country A.

Next, we add a condition: Country A has a common currency called “yen” as well as a local money called “eco. Let us assume that 1 eco = 1 yen. Country A harvests 100 kg of pumpkins, the same as last year. Country B purchases only 80 kg of pumpkins and pays 800,000 yen to Country A. Country B pays 200,000 yen for the remaining 20 kg of pumpkins. The remaining 20 kg is exchanged for 200,000 ecos. However, there is an important point here. The first condition is that Country A has no other industry and imports all necessities of life from Country B. The second condition is that Country B has no other industry and imports all necessities of life from Country A.

If we assume that the local money “eco” is 200,000 eco, Country A must produce the equivalent of 200,000 eco-friendly products on its own. This is where the power of regional money comes in: the 800,000 yen for the 80 kg of goods will be lost to consumables from Country B, but the 200,000 ecos will remain within the country itself. In the system of local money, as long as there is local money, there will be trade and distribution of goods, and if the economy of country A is 1,000,000 yen, even if the trade from country B is unilaterally cut off, only 200,000 ecos can be prevented from being damaged. Furthermore, the more self-sufficient a country is, the more this 200,000 ecos will increase, and thus, a more stable economic system can be built.