Economic impacts of community-led initiatives

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Community-led initiatives are experimenting and rooting innovative economies at the local level with preliminary positive impacts. CLI are effectively creating new goods and services that better respond to the local needs. At the individual level, CLI do create direct and indirect job opportunities with nearly one full time job per European CLI and provide a financial benefit of 132€ in average per year and CLI participant. At the local and community level, each CLI tend 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 and CLI

Also, a literature review within TESS [1] [2] considers that CLIs do have the following impacts:

  • 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 motivation and perceptions of CLI

By interacting with more than 60 CLI in Europe, TESS project listed the following CLI economic motivations [2]:

  • 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%) [1], [2]. 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% considers that this goal was "somehow" achieved [2].

Job Creation

More than half of the CLI analysed in TESS project (59%) did created directly or indirectly jobs, with some reaching 320 employees, nearly 15% created 10 jobs and most created part-time employment. One third of all employment created is indirect, meaning that people are not hired by the CLI but their job is created as a direct consequence of the CLI activity. In average, CLI analysed in TESS created nearly 8 direct jobs per CLI and a bit more than 3 indirect jobs per CLI. An overall analyses estimates a median of 0.7 Full Time Equivalent jobs created per CLI.[2]

Financial benefits for members and community

Knowing that CLI can make goods (such as food) and services (such as transport and energy) more affordable (or for free) and promote reuse, repair and upscycle all all sorts of material, initiative members can save in average nearly 132€ a year per person. Nearly 21% of the initiatives provide a benefit of up to 50€, 8% between 50€ and 100€, 16% between 100€ and 500€ and only 3% do provide a benefit of 500€ or more [2]. Also,

TESS general assessment estimates that CLI do promote a median of 18.740€ (more than eighteen thousand Euros) of annual wealth generation and 16.734€ (more than sixteen thousand Euros) of reduced economic leakage per year. Due to the lack of data TESS considers that "this is likely to be a considerable underestimate" [2].

Potential negative impacts of CLI

Several authors do consider several potential negative indirect effects of CLI 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

CLI Innovations with Economic impact

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 CLI in Europe do aim at creating or diffusion economic innovation by offering new goods and services that respond local needs [2]. After verification, TESS consortium, realised that "nearly 21% of the studied CLI did actually introduced 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." [2]

CLI - Innovation sub-systems (TESS D4.1, 2016).png [2]

According to TESS study [2], among the ones mostly observed in European CLI we have:

  • 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,
  • alternative ways to money for exchanging goods (see also Local currencies)
  • new sustainable transport solutions and local infrastructures

CLI in northern European countries (such as the UK, Finland and Germany) do consider that this innovation is at the core of their aims while this value is below 50% to southern European countries (such as Italy and Romania) considered in the TESS study [2].

Registration of patents is not a common practice or a goal achieved by CLI, with only 1 out of 51 screened, with several CLI considering patents unsuitable for a community-based approach [2].


  1. 1.0 1.1 TESS, ARTS & PATHWAYS, 2016. Common Policy Brief.
  2. 2.00 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09 2.10 2.11 2.12 Celata, F., Hendrickson, C., 2016. Case study integration report (TESS Project Deliverable No. 4.1)
  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, 1-17.