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Rural System? Just Dreaming …
A For-Profit Conglomerate for
Meaningful Jobs
Healthful Communities
and Improved Natural Resource Management
by Robert H. Giles, Jr., Ph.D.
Professor Emeritus
Virginia Tech, Blacksburg, Virginia
2007
Chapter 7. Objectives: Bounded Profit and a High Q*
Dreaming: "Tug" is a cute word. I tug and tug and the large fibrous rope feels good, but my arms are hot with pain. They must be near their limit. The others are not pulling! I need help and I lose ground, then gain, then lose, and…there is no one behind me pulling and the rope is taut …"taut" is a cute word … And my belt at the back is attached to the rope. It is my rope! and I tug and tug …I fall and lift myself …I cannot stop for I may lose…loooze is funny …tug is cute. Just Dreaming…
| Rural System does not exist, so this chapter describes its objectives fairly explicitly. Not having them is one reason why it does not exist. Of course a computer does some of the hard work on them. |
The Grand Dis-satisfaction
It seems clear to me that something … Rural System or something … is now badly needed. The feeling is grounded in the evidence that current activities in developing countries and parts of the US do not appear to be working well over large areas or affecting well many humans. Land degradation continues, agricultural production has stabilized, and populations with their needs are increasing. More than 670,000 households in the US, (nearly two million people, most living in rural America), lack access to clean potable water and indoor plumbing. Rural minorities are among the poorest and worst-housed groups in the nation. The social costs are very great. People who analyze others' behavior and write about it are themselves not starving people, and miss an important point. Thousands of people living in rural areas are starving or live day-to-day, dollar-to-dollar. One out of five children comes to school each morning hungry (yes, in the USA, 2007). They lack basic needs for shelter, nutrition, and health. They are on the lower side of economically "marginal." Whatever the reasons, whatever the excuses, the conditions are real, and changing them includes little time in their schedules, or expenditures of money for risk-taking, or effort for going after payments and incentives for changing the way they spend their lives.
In total, it appears irrational to continue along a pathway well marked with failures. What exactly was expected? What was the destination of the pathway? There are scraps of wisdom in sayings like "to get anywhere, you have to know where you're going," but wisdom is weakened when it is cast with the political savvy of "without a destination, you can be sure you will get there." We have to formulate precisely where we are going. I suggest using "objectives" to do so.
People re-discover in contentious meetings the different meanings of goals, objectives, missions, needs, purposes… and sometimes "issues." They even use "stabilizing the environment" as a desirable standard, as if it were the best or all that could be achieved. They sense that the words and their ideas are similar and then proceed to discuss problems and situations as if they were synonymous. Analyses, definitions, and agreement on the precise use of words seem essential for rapid progress in developing an objective subsystem for Rural System and for elsewhere within natural resource and land-use areas.
For years I worked with students inventing ecological and wildlife computer games. Most games were educational and fairly trivial. The most difficult barrier in the process was developing a clear meaning for winning. To "win" means to have achieved a desired state, one with specific criteria. Winning may have a connotation of competition, but that is not required. How is a player to know when he or she has won? What is a "win" in wildlife management or environmental management? How would we know? (Chapter 5). Game playing requires a measurable statement, a few criteria, and the real world of fiscal responsibility and agency accountability requires that as well. I could devise for my games an artificial scoring procedure and the highest score would be the winner. Student players wanted a standard score; "higher" or "highest" was inadequate for a game. My scoring procedures had debatable elements. It was tempting to tell students, "Hold your doubts; just learn to play the game; get the highest scores possible." That would suffice, and there seemed to be a few educational gains. It strangely seemed to be realistic. We as a society, as a collection of rural people and those with them, do not have a clear objective. We're just playing the game; we have indices to how well we are doing but few are satisfactory and some produce counterintuitive results. For modern sophisticated Rural System work we need a clear objective that inspires or at least allows accountability and allows feedback to work. An objective is needed for uniting efforts to a common end, to at least improve communicating.
Satisfaction
I think that "problems" exist in the gap between where we are and where we want (or need) to be. A problem or dis-satisfaction is one expression of the difference between the actual or perceived condition and the desired condition. ("Issues" seem to be different sized problems with an attached request for action.) For example, a dam is proposed and we like conditions as they are now, and we have been told about land losses and dangers if the dam is built. We perceive a future condition unlike the present and judge that it will be undesirable. It is that difference that is the problem. If there is no perceived difference, there is no problem. The larger the real or perceived difference, the greater is the problem and the greater the dissatisfaction. Satisfaction is the fuzzy condition of an insignificantly small or unperceived difference between the desired condition or function and the actual one. Action that is underway to reduce the difference can sometimes be judged as satisfaction. When there is no major difference or we are purposively or optimistically busy, we are satisfied. The more fuzzy the objective or the perceived present condition (or that which is proposed), the less satisfied we are and the more insecure, frustrated, or dissonant our condition. Rural System seeks satisfaction and intends to be busy in well-selected action.
Rural System provides a clear objective and incentives for staff and local citizens starting and staying on the pathway to achieve that that satisfaction. Incentives have to be big enough to get people to alter their behavior. An option offered as an incentive that changes no behavior is not a sufficient incentive. It is not significant enough to be called one. Incentives, however, within the Rural System perspective, cannot be financial gains that are at first sufficient to provide investments for extractive work and expanding poor operations. In order to hold, secure, or achieve rural benefits, people need money in constrained sources and for limited purposes. It does not offer "discretionary income." I am not discussing vast amounts, only amounts adequate for survival and for reducing major risks, because only after that can people give significant thought to the future or to the quality of life. While there have been spectacular individual financial and land donations and volunteer efforts to improve natural resources (like donated refuges, forests and rangelands, trust lands), they have not been adequate to meet regional and world problems related to human health, land management, and conservation. One or more clear new large incentives are needed. More are needed more widely and consistently. They are not now sufficient. I know that Rural System is limited in its abilities to reduce the dissatisfactions but what it can do provides an inspiring horizon
Rural System has the general or Type 1 objective (described below) for rural private lands, a set of four of: (1) providing meaningful employment, (2) improving quality of life, (3) aiding in stabilizing rural communities, and (4) improving natural resource availability and benefits. (Public lands already have their own financed systems and programs.) It tries to provide financial incentives for people to become engaged in the System so that they may achieve their objectives and thereby participate in achieving the System objective. There is a planned circularity here, for informed people will want Rural System to succeed for their personal gains. People using the resources of the system and it being profitable over time will define its success. Rural System is grounded in my dad's often-ignored-by-me premise that "money talks" for almost anyone. The range of incentives proposed includes those of:
There will be some ownerships on which large, direct financial gains cannot be made. The cost of analyses and management of such lands are justified on the basis of a type of insurance, i.e., protecting the owner from injunction or suits claiming damage from (or to) the property (e.g., odor, noise, silt, scenic value loss, runoff, erosion, or wildlife damage). Observations and analyses on such lands provide:
These are incentives to engage in achieving the objective of Rural System. This is a socially responsible enterprise, perhaps one called philanthropic or being in the realm of social entrepreneurship. It denies the connotations of the profit-maximizer that is proceeding at any costs to others. The objective must be very clear. It is a set of four: employment, community stability (social equity), quality of life, and improved environmental management … but all with a monetary metric. Such a measure seems to have ends and means mixed. "Profit" has an evil connotation within much of the literature of conservation and the environment. In the rich nations, it is not maximum profit that is being sought but fame, recreation, possession of goods, and attention. The objective is adequate profit which we have described as "bounded" or enough within stated bounds (described below).
Resource exploitation, misuse, and the un-intended costs of pollution have typically been associated with profit seeking, especially those which are short-term or immediate and apparently without regard for the costs to others, often over time. Rarely is it done with evil intent. Part of the bad press issues have been in the contests between private and public interests such as those between dam builders for electricity and irrigation seeking inundation of public land, between nuclear power generators and those wondering about where and how there will be safe waste storage, and between those protecting public lands and those stockmen and women grazing it excessively at excessively low costs.
I have observed that appeals to social responsibility, morality, and even the "land ethic" have not worked adequately over the past eight decades to achieve desirable land use and natural resource management. It now seems essential that we use profit as the major incentive for widespread private rural land management. The single word "profit" is too simplistic. Herein it has associated concepts of reasonable amounts (rarely of "blue-chip" magnitude), fairly stable, only an index, and when used with "worth" or "value," implies a lower level …i.e., as in"at least this much." It expresses a level after which other difficult- or impossible-to-quantify benefits or gains may be possible. Such gains are typically discussed as matters of the heart, spiritual, esthetic, and the results of having a "land ethic." For the land owner when asked to sell their cherished but now economically marginal land it expressed in an alternative way what might be the discounted value of that land when under Rural System management for a few years. The possible net gains from the sale and "development" may not be so great. Hawken (1993 :11), discussing an environment restorative economy, said that it "…requires that people accept that business is an ethical act and attempt to extend to commerce the interwoven, complex, and efficient models of natural systems."
Financial incentives, even great ones offered, will not move some people. I propose passing them by and moving to the next of hundreds of willing participants in line. If we can make modest continuous profit over many years, we can achieve the fundamental conditions to achieve that set of four general objectives. B. M. Vyas, National Dairy Development Board in Gujarat, India, said, "We are not in the dairy business. We are in the society-building business. Business is not the goal. Business is the means to build a society that is just and fair and that empowers the poor." Understanding and sorting out these issues continues to bedevil me for Rural System just as it has natural resource management specialists for a century. Here in this chapter are thoughts leading to a clear objective and a reasonable bottom line.
I agree with Maurice Strong (1996, Environmental Matters, Annual Review of the World Bank) who said, "I am persuaded that the twenty-first century will be decisive for the human species. We are pushing to the limit this planet's capacity to support human life. This confronts us with a challenge of unprecedented proportions; we literally must manage our own future. Although science and technology provide us with new tools which vastly lever our capacity to do this, we will not find the solutions there. It will require the application of human ingenuity, political will and social discipline on a scale never yet achieved to ensure the kind of cooperative management on which our survival will depend."
Hart (1985:45) said that agricultural systems always include both social and ecological subsystems. "The interaction among these subsystems makes agricultural systems much more difficult than either natural ecosystems with inputs and outputs managed by man, or social systems that use biological systems to convert a set of inputs into an output with higher economic value." Later he (1985:46) observed "The production of maize on a given plot of land in the US is as much a function of price support, land set-aside, and grain export policies as it is a function of soil fertility and rainfall."
Many rural-related agencies (companies, organizations, etc.) do not "fit" the ecosystems they seek to manage and pose "…a considerable challenge to successful and sustainable integration of conservation and development" (Brown 2003:479-480). The Rural System design is for an alternative, one with a better fit than yet available. The difficulties lie in both (1)the areas of the natural world we want managed and how, and (2) the nature of the enterprise to do it. As we move from the crop in the field to world markets for the processed crop that is produced, the social and institutional factors become large. Working with "the whole of it" is the challenge. I seek to clarify, narrow the objectives, and to design Rural System, an enterprise, that fits well with that intent… and continues to do so. Past experience suggests that we have failed in making the fit…failed to see the limits… failed to hold the long-term view … but there can be improvements… and we shall attempt to make them…but someone will surely try to start all over. "Restarting" we do not need. We do not have the time and money for it. We need new work with active feedback.
I believe that a financially incentive must be a major part of that "social discipline" that Strong asserted. Rural System attempts to provide a highly probable though modest financial incentive for most actions suggested as part of a major land restoration, enhancement, and management program. The incentive is for gains over many years from the combined action of Q Works, the enterprises, and Land Force, and many people working on or from private ownerships, the Rural System Tracts within a region.
Some Economic Dimensions
I have sought a named economic theory or fundamental ground for the proposed work but now believe the list of characteristics is too long for a one or two word capsule. The characteristics of Rural System business are:
1. classical profit as a major or umbrella objective
2. multiple profit estimates with time, rate, and discount procedure brackets
3. classical expected present discounted net gains as a decision criterion
4. associated social objectives (e.g., Q) with financial descriptors
5. combined regional action for private profit
6. legal, policy, and owner-imposed constraints
7. an inordinately long planning horizon of 150 years sliding forward one year each year
8. experimentally-determined-by-simulation bounds over 150 years to the changing, decided profit objective
9. unprecedented amounts of high quality information
10. abundant use, as needed, of best estimates and Bayesian processes
11. spatial information (about 100 factors for each 10-meter x 10-meter unit of a land and water surface map for land owners)
12. abundant environmental, social, and ecological information, a knowledge base
13. temporal information (historic and predictive)
14. expected known "transitions" (sequential production, ecological succession)
15. short-term (annual) and extended cumulative estimated production (as for trees)
16. a variety of computer optimization procedures, heuristic programming combined with simulation
17. computer aided decision for optimum span of control
18. extensive sales of opportunities, services, and memberships
19. large, high-risk start-up line-of-credit investment
20. land as a "working platform" requiring energy and other inputs, rather than as space and soil nutrients to be exploited; land as a "resource factory," an aggregation of privately owned working platforms
21. "land" (see definition Chapter 12); or as in classical economic theory "land, labor, and capital") as the primary resource with energy and nutrient requirements for use and production, suitable size or cumulative size, suitable topography, connectivity or nearness to other resource production elements, emotional bonds, potential dynamics of demand (some through learning) for the land and/or its products or services
22. land (the ecological space) having cycles and flows, natural and human-made; origins (omitted in most ecological theory) to include ideas, weeds, and "exotics;" processors (the "services"); and time (for growth, processing, or expected cycles)
23. knowledge of stochastic processes at work (positive and negative interruptions in flows and cycles (staff, budgets, policy, law, climatic, topographic)
24. a system producing non-diminishing returns from single and grouped managed biological populations
25. combined renewable and non-renewable resources
26. work with unusual sets of resources
27. unlimited to conventional agro-silvo-pastoral-aquatic procedures but including other Rural System group functions
28. including three-dimensional analyses and work with rural layers
29. negative feedback operational to stabilize profits within stated bounds, damping positive feedback and likely subsequent crashes, perhaps equivalent to "market
equilibrium" (Christensen 1991:81-82)
30. feedforward, adjusting current work to preserve a bounded-profit-making system and resisting diminishing returns from the Rural System via restoration, intensive cultivation, managed mineral and water cycles, and conservation and use of embodied energy
31. planned variety (contra biodiversity)
32. product development and value-adding tactics
33. replication of the system in areas where there is trouble to gain employment and improved and sustained land use benefits
34. competitive advantages of innovation and work with people doing prior research
35. transferability among enterprises of the collaborative, a product of the systems approach, allowing the experience gained in one sector to be transferred to the related enterprises and products (Christensen 1991:83)
36. increased monetary value of a tract (real estate) and adjacent properties when operated as a part of Rural System.
Risks
One of our basic premises is that no private profits are made without someone taking risks. All other dimensions of business are conditional upon some one or some group taking the risk of a decision.
Especially in rural conditions, risks follow the product rule, i.e., the the risk of A and B is the product of them (e.g.; 50-50 means a probability of 0.25). Environmental, agricultural, and natural resource enterprises are risky, for they are subject to frequent and severe supply problems, recurring natural catastrophes, shifting consumer demand, disease and pest outbreaks, and national and international tax and subsidy policy changes. The local natural resource scene seems at least as risky as that of the national scene. Locally the risks may emerge as variations from changing topography, soil moisture, species composition, and past fire and cultural effects all compounded by changing personal financial ability to manage production, buy equipment, change practices, or employ labor.
We build the concept of risk into our expression of an objective for the system. We use the conventional phrase "expected value." It is an estimated probability (e) of a proportionate failure (E) to achieve an amount of benefit, B, or cost, C. The relationship is (1.0 - e) E. Later we include in the expanding concept of monetary inflation (or deflation), z, as (1.0 - z). These may be values inserted into an equation or small model so that they may be varied in computer simulations, usually among high, low, and median estimated values. Typically the beta distribution is used to estimate the median value that is most likely to be studied as characteristic of the system being observed. (I'll not return to these herein but they will be used in appropriate modeling.)
High profits are very rare in agriculture or natural resource work. Few landowners say that they seek high levels because they have many other objectives (for example, a rural atmosphere, quality of life, pride of ownership, family place, personal freedoms, avoidance of certain stresses, recreation opportunities, an irrational gamble on high land-value increase, etc.). These objectives may be equal to or surpass those of planned high-financial return on stock and bond investment. Large numbers of people leaving the rural areas testify to there being higher financial needs than the farmland situation now predictably provides. They seem to deny or forego their objectives. Of course the objectives of moving toward the city are not always clear and they can be easily seen surrounding the desire for "more money" as less work, better schools, and proximity to the status related to high-wage employment. Whether desired family time, medical support, security, energy conservation, and health enter such lists differs among groups and seems to change.
Achieving most of the objectives beyond a desire for more money seems to be conditional upon getting that money and having a surplus beyond life-support needs. Like risk, most of the stated and "non-quantifiable objectives" are achievable …conditional upon having sufficient readily available money… even to assert them as real… or seeking government allocations to provide them. Individuals differ, but large groups of people seem to have many common objectives related to rural resources and life in rural areas, and even though some are especially well-voiced, they all require sufficient fairly-stable funds to access and use them. Individuals as well as communities must have sufficient sustained financial resources for living and achieving their objectives.
"Sustained profit" is the summary objective and I, with others, have been na&#iuml;ve not to face this. (Sustaining production is not the objective, for that is unlikely and largely out of the hands of the manager since it ignores the likely changes in profitability and productivity that are a function of weather events, labor disputes, marketing, middle-men, current public policy and price supports, available support resources (e.g., fertilizer), and on-site management.) Increasingly, sustained access to government-supported medical treatment and health care is the objective of people living at the financial margin. In some communities, direct financial gains will be foregone by people in lieu of the poverty status and such access (and thus lower risk from disease or trauma).
There are thousands of private landowners. To the extent that they do not want profits, refuse assistance, or have other motives, Rural System may only continue to offer them its diverse expertise and services … its range of benefits (discussed below). There is much work ahead and it will be growing among willing private landowners (and probably those responsible for superior management of some public lands).
Bounded
I have stated several times that profits are the objective, but that statement is the short form of the appropriate longer phrase of our objective which is sustained bounded expected present-discounted net estimated financial gains over 150 years (sliding forward a year each year). The length and complexity of that statement are essential for eventually gaining clarity and then for computer programming. Bounded signifies the stated upper and lower acceptable limits on lasting profits. The bounds imply the reasonable extremes in annual expectations for profits. We know that we cannot achieve "maximum profit" each year. We know the evils of boom and bust economies, the intolerable losses and diseconomies of irruptive profits, extreme highs followed by extreme lows (requiring layoffs, etc.). We know some natural systems cannot persist if they are interrupted, even briefly. We know that major computer programs can be lost with the death or loss of a programmer. We see smooth oscillations and call then "cycles" in some system performance, but we know that regular ups and downs are unlikely in small agricultural systems and we know of no reason to try to achieve it. We want high profits, but we do not want to over-invest in structures and machinery needed to gain it…because we know that maintenance and updates can be costly in the future. We cannot stand the losses and the grief of extreme lows, for that is to court bankruptcy. We cannot stand the guilt and pain from extremely disadvantaged people at low points in our society. We cannot tolerate the crimes committed by a few people in desperate financial stress. We want to achieve a high, consistent, uninterrupted performance, amounts that we can graphically describe. We need to state what is tolerable and specify the perceived upper and lower limits over time, i.e., the bounds.
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| Fig. 1. A system performance measure, profits in the bold line, fluctuating about an objective over time. A, is decided. B and D are upper and lower bounds. F on the bold line is an example of an annual point occurring within the bounds. E is unacceptable performance typically requiring new system controls and management intervention. |
We can say and generally agree that we want sustained economic growth, an end to poverty, adequate education, health, sanitation, housing and employment, all for taking care of minimum needs and decent standards of rural life. We know that the costs will be great and that everyone is not likely to be able to experience all of these. We just have to be more precise. We need to be reasonable in accepting that surely we will allocate our limited financial resources in a different way to achieve them each year and for different groups of people with changing needs. We have to ask and demand specific answers to what, when, where, and for whom we want things and services…our fundamental needs to be met. How will we know we have a good community, a stable region, and a good ecosystem? We will know based on how well the conditions (the structures, functions and relations) match with our objectives. The pattern for solving that match will be approximately the same for Rural System as for the landowner (and for their communities).
We do not want "average" performance (e.g., adding annual profits and dividing by the years of operation), for we fully expect managerial skills to avoid equal "lows" along with avoiding the "highs." While extremely high annual profit may sound like a good goal, we recognize the likelihood of not being able to sustain this, that the costs of gaining it tend to be high, or that the risks of the following-lows are always excessive to individuals, thus to their society. Such highs will probably reflect misallocation of resources for the long run. We want to minimize statistical variance among the years, but we do not expect the deviations from the objective to be equally high or low. We do not want to compute the total net gains over an extended period, because one very good year or one very bad year may hide the excellence of intricate managerial performance over the entire period. We definitely do not want to sustain production of products and services…for that can produce surpluses, capture inefficiencies, and of course such an index ignores prices of the products and services and their expected often-related changes and undesirable secondary effects or "externalities."
The bounds are set by Q Works and are usually expressed as a proportion of the profit. Decisions about them will be aided by computer simulations. They will become the subject of great debate for they cannot be readily changed (at first, a 5-year minimum duration) and afterwards will be perceived as a two stair-step functions.
We have a clear objective. We want minimum deviation about our objective. Thus our objective is: To create and operate a system that minimizes annually the total annual M value resulting from the conglomerate enterprise as if operating over a dynamic planning period of the next 150 years. The M values are the absolute value of actual profits minus desired profits (the target or objective profits), all within bounds. Profits are the expected present-discounted net financial gains for the 150-year period. At optimum operation, M values are zero each year. The planning period slides forward one year each year; there are more constraints than the bounds; and profits are distributed by a formula (suggested below).
That objective, when the design is complete and implemented, allows the people of Rural System or a region to achieve a high quality of life at lowest feasible cost over a very long time. The successful system delivers an annual regional performance score, Qt, (explained in the next chapter) based on that quality of life. Moreover, it purports later to improve significantly the conditions of hundreds of thousands of people in developing regions and countries, including those of the US. To make a profit, there must be operated a system that provides benefits within the categories of employment, community stability, and high quality of life. To do that it must fulfill the objective of making stable profits over a long period. To do that, the system must restore and improve land. For that to have meaning for the future, it must manage it very well. Improved productivity may require direct investment in the land and its productive characteristics, a cost of business. It must also add into its diverse corporate structure income from all sources (the proposed Groups of Rural System). It must achieve an optimum size. The system has a major role for profitable associated enterprises, some on the same land and water, but all being a diverse well-managed conglomerate of rural-related enterprises.
We contend that we need a high quality of life, to move toward a high Q* score and to keep it there with reasonable costs that are shaping the changes we are likely to encounter. We define a "good" condition, and by that definition of good, do not want that to change very much and probably not very fast. "Very good" for a few will probably not be very good for another small group and the costs and risks of something new tend to be high. We prefer the social advantages of group-goodness to the special gains of very-good-for-the-few. Thus, we'll not change fast. The costs of not changing can also be very great, and thus we continually clarify objectives and do the best analyses possible and act to move the performance values of the rural environment to the next nearby spot on the graph, close to the objective and at least within the stated desirable bounds. We assume that there are many equivalent ways (substitutables) to achieve the objectives stated by groups. Those ways are the topic of our ongoing search for best decisions among competing alternatives.
"Objectives" is the right word to use among the mess of meanings listed above. There is no need to use several words. There are seven types of objectives. These are not hierarchical. They are not in rank order. They are neither "levels" nor do they have priority. Here are the types and their characteristics. How each is related to Rural System is then discussed below.
1. Type 1 - General - Very broad; typical of preambles and opening paragraphs of constitutions, bylaws, and legislation. (Many groups call these "goals.")
2. Type 2 - Fundamental - Also large in scope, these name the major needs of food, water, recreation, quiet, etc. (see Maslow and other writers)
3. Type 3 - Success Criterion - The means of measuring success; e.g., to minimize risks; to maximize a B/C ratio; to gain a high score (relative to a situation)
4. Type 4 - Policy/Constraints - The major statements such as "all while maximizing safety"; "subject to laws," "within the budget", etc. (e.g., as in "my objective is to be safe, legal, not offend Mr. X," etc.)
5. Type 5 - Primary - Specific achievements needed (often in a long set) e.g., to minimize erosion, to maximize crime, to stabilize or increase land values. I work on the premise that decisions by thoughtful people are always made to achieve many Type 5 objectives. (There are virtually no single-objective systems.)
6. Type 6 - Actions - Called "goals" in some groups (not those using Type 1 concepts), these can be viewed as means to achieve primary objectives, e.g., to construct 100 meters of livestock fence; to build 1/4 mile of nature trail.
7. Type 7 - Futuristic - Although all objectives at the time they are written tend to be related to the future, this specialized type suggests the need for improving projections, actively assuring work, before it is started, to accommodate in the present the changes that are predicted or anticipated.
We may not know our objectives. They are often hidden by years of ignoring them, by law and culture, by common agreement, and by being in mixtures of types. We say things like "we'd sort of like x" and often use the statement of "in general, we'd like y" at the same time shifting from the personal to group ambiguity. We tend to have fuzzy objectives and to try to match proposals for achieving them, usually at least as fuzzy, with them. We are unsure of the match and emerge from meetings, discussions, and reading very dis-satisfied. Much of the diverse work of Rural System is devoted to reducing the difference and thus the feeling.
While studying the meaning of having a "high quality of life," I have wondered how we could make the case in a courtroom dispute that we had delivered on a contract to produce such a thing. What does that phrase mean and how can we prove it? How can we measure progress toward it? I think it usually means "the condition in which most of my primary, important objectives are being met," or the dark side of that: "when key objectives are not being met or I am being prevented from doing something or prevented from achieving my objectives." For me, a clearly important part of systems work is forming clear, precise, often measurable objectives. "Having a high quality of life" is not precise. That phrase is mostly for political talk and general conversation. Because both are very important, a quality of life score is computed to accompany the profitability index. It is described in the next chapter.
A part of systems work equal in importance to objectives is feedback, but it cannot exist without objectives (for against what would be the comparison and adjustment be made?) Linear thought is "just one damned thing after another." Looping, retro-thought, cycling, and simultaneity are needed for the good work in the modern rural arena. Feedback will be needed for all objectives, at least editorial work. The criteria for good objectives, the objectives for objectives, both for formulating, then subsequently perfecting them, are in Table 1. Great precision in meeting these criteria is required for Type 5, primary objectives.
| Table 1 - A guide for evaluating the wording and structure of objectives
1. It is important, worthy of specific consideration, and non-trivial. |
Rural-System-Specific Objectives
Here are the types in more detail, specifically for Rural System:
Type 1 - General
The "vision" for Rural System can be considered a general objective. It is brief, vague, and while its writers may be looking ahead, it tends to be a statement of an overall desired condition. Stating enterprise visions is a well-established practice (see frontis), and we leave it alone and continue with separate discussions of general objectives.
The general objective for Rural System is to operate a lasting profitable enterprise assisting in achieving and maintaining a healthful, interesting, well-managed environment for people and their guests, all of whom are achieving benefits in major rural regions of Earth.
Slightly less general is the statement from above: "…for rural private lands, a set of four of: (1) providing meaningful employment, (2) improving quality of life, (3) aiding in stabilizing rural communities, and (4) improving natural resource availability and benefits."
More general, Rural System has an objective of being a modern enterprise dynamically responding well to retain and produce benefits to customers and others. Rural System demonstrates blending of ecological, economic, cultural, social, esthetic, energetic, and enforcement principles to achieve benefits from rural resources into the long-term future.
The benefits are not the classical economic"goods and services but the elements of the following list (repeated from Chapter 1) :
Services
Products
Structures
Events
Opportunities
Views
Information
Ideas
Inspirations
Memberships, and
Memories.
Few people understand large, diverse rural or resource systems. Citizens inquire of agency leaders, "How are things going?" and, like members of a board of directors, are willing to leave details to the CEO and officers. They want a system performance measure, a general grade on the system. They want to see a graph and expect a flat or increasing main line to suggest: "OK and as well as in the past" or that "the system is improving."
The U.S. Forest Service in 1994 promoted "ecosystem management" and, ever since, has tried to define it and to make it functional. They had no way of synthesizing that concept, of suggesting how the public or the staff would know when it had been achieved. They cannot yet answer anyone's "how're we doing?" question. Rural System has the answer in the Q* index discussed in Chapter 9 but it has related, well-known profits and profits index, M, as its performance measure, discussed below.
Type 2 - Fundamental
Largely by understanding and working with the relations of things, Rural System seeks to assist in meeting fundamental needs within the full range of human and community life. The above listed benefits are to be distributed within these nominal fundamental objectives. The titles of each, most of which we address in some way and advocate for our neighbors as being the appropriate units for comprehensive planning, are as follows:
1. The People -Population Structure and Dynamics
2. Health
3. Education
4. Safety
5. Civil Defense
6. Housing
7. Food and Personal Supplies
8. Industry and Commerce
9. Ownership of Property
10. Appropriate Land Use
11. Fire Prevention and Control
12. Recreation and Leisure
13. Religion
14. Community Identity
15. Organization and Operation
16. Employment
17. Food and Nutrition
18. Living Spaces
19. Landscaping and Vegetation
20. Security and Justice
21. Utilities and Energy
22. Cultural Development
23. Open Space
24. Taxation and Finance
25. Communications
26. Social Services
27. Esthetics and Beautification
28. Ownership
29. Transportation
30. Civil Defense
31. History
32. Waste Reduction and Recycling
33. Taxation and Civil Finance
We can formulate a fundamental objective, X, for each title above such as "To achieve more than 80% (or some specified level) of the needed benefits (expressed in a list of Type 5 Primary objectives listed under each of the above 33 titles) of the people of the region within the planning horizon for Objective X." Each of these has a specific role within the computation of Q described in Chapter 9.
I believe that Rural System may address many of these fundamental objectives eventually. It can provide a major essential planning aid, that for quantifying objectives and scoring community performance. Agencies, corporations, and others now address many. To the extent that they are not well met, there are needs and thus opportunities for the System. To the extent that they are met defines the temporary quality of life and its index. Some of the failures have resulted in agencies competing for funds and power. Other difficulties have formed over meaning, importance, changing emphases, and the essentials for simultaneous, not sequential work. Seeing them, thinking about and assuring each a fair place and the incentives of competition at the decision tables will result in major improvements. Understanding how some objectives are achieved by past investments, history, and local natural resources can explain the differences between communities and the intrinsic goodness of some. Finding relations between pairs of them and encouraging synergism (rather than separate work) will produce major gains. They are made explicit (later) within the Primary type objectives below.
Achieving ecosystem management might be a Type 2 objective but it is best addressed separately and politically. It is an attempt to amalgamate many of the above fundamental objectives, to specify some Type 4 objectives. It fails to have a means for measuring or expressing coherently success whenever it is perceived to be achieved.
Type 3 - Success Criteria
Type 3 objectives are the most difficult to present to groups because the concepts are not in widespread or daily use. Naming the objective exposes the optimization strategy being sought and the implementation pattern being attempted (and, however, begs for constructive critique). For Rural System, it is pluralistic, having two separate but overlapping objectives that are being sought within a constrained maximax strategy.
First we define M. Rural System procedures seek to minimize M in the following equation,
Where b are benefits and c are costs, and
Where a is the upper bound and z the lower bound
Where | … | is the symbol for absolute value
And m is a net value, the
m = 
b - c
And m' is the annual present discounted value of m
m' = m / (1.0 +r) t
And m* is the annual objective (shown above in Figure 1 as the line A), then minimizing the difference between the actual and objective condition (wherever less than the a and greater than the z bounds) is | (m' - m*) |
M = | (m' - m*) |
And M results from accumulating estimated values for the present and those for the next 149 years. It is the absolute value of actual profits minus target or objective profits, all within bounds. Profits are the expected present-discounted net financial gains for the 150-year period.
A Type 3 objective is to minimize annually, subject to constraints, the total annual M values resulting from the conglomerate enterprise as if operating over a dynamic planning period of the next 150 years. Annually Qt is computed (as described in the next chapter). One entry into that computation is the latest value of M. Another Type 3 objective is to maximize Qt . The pair, M and Qt , are displayed for decision makers. Their jobs are to minimize M and to maximize Qt.
Qt, already mentioned above, will be described in Chapter 11. Summarizing how it is achieved here, it gains from subgroups of citizens their several expressions of the value (i.e., the relative importance) that they assign to one unit of each fundamental objective within a long list which has been well established for rural people and their communities. Then, the numerical value for how well each valued objective is being achieved is added. This includes terms of expected units of demand, each year, including possible elementary substitutions for things of demand. A constraint assures most types of diversity will be maintained. It includes a major dimension of probable changing "production" over time following principles of ecological succession or transition. The cost of changing Qt can be estimated and an approximate Benefit-to-Cost ratio examined.
The system is under the very general feedback operation for both M and Qt , for example
Qt + 1= Qt - k (Qt - 100)
With k symbolizing the complex of managerial controls and forces being brought to the system to minimize the difference between the actual score and the desired score of 100. Time, symbolized as (t) and as time-in-the-next-period as (t+1) , a major element of the Type 3 objective, is discussed below under "the reasonable period" and in Chapter 8). Similarly, the cost dimension of "net" gains is discussed below with time and discounting.
Type 4 - Policy / Constraints
Rural System holds few limits on ways to achieve objectives. There is no agency saying restrict thought and action; no between-agency competition for greater budgets. The only limits seen are those of the legal system, ethical behavior, competition, and profitable action for bounded profits … over the long run.
Some economists in the public arena have had great difficulty getting well-stated objectives and have found useful solutions in working with a set of constraints phrased as objectives (those of type 4). These define a very limited decision space from within which conspicuously advantageous alternatives can then be selected. Objectives such as "to not spend more than amount A," "not to hire anyone other than union members," "not to be farther than one mile from running water," "not to be closer than 1 mile of a public school," "to finish within 18 months," etc. are potentially programmable constraints for a system. They are the "minimize (or maximize) subject to…" statements. They can limit alternatives among technology, time, place, personnel, and others but they still can be phrased as objectives. They can define an action without actually naming that desired action.
I've tried to combine objectives, design elements, or constraints for Rural System itself of:
An Unusual Constraint: The Reasonable Period
For a rural environment, a sustainable community is a community (with only a temporary decision about a definition for that) that with great restoration, care, planning, and intensive management can thwart all challenges, plant closures and wars, pestilence and natural catastrophe, and political instability and still be recognizable as that same community over a very long period. The period needed has to be greater than 30 years; if less, the observation period for survival is still open. A few local churches and fewer businesses may be the only examples of such special communities. Some church denominations will make the claim.
We just want to last forever the things that we have perceived to be good for us and for our parents. Seems reasonable. We want new things and, of the good ones, we also want them to last…until something better comes along. Maybe our wish is not for the indefinitely sustained!? Maybe not even indefinitely sustainable, for then there may arise a condition when it can be replaced or is replaced when its condition is seen to be disadvantageous?
We have a set of premises or concepts related to time and thus how we discuss a reasonable period for investing and making comparisons among competing investments. The premises frame the temporal view of our listed objectives and likely benefits for people of the rural areas. The Rural System analyses that are conducted are for the reasonable, socially-responsible landowner. A set of premises affects the formulation of the objective. These are:
Like the energy in gasoline released by a spark, an idea can change the value of land overnight-from great loss or great inflation (e.g., current furniture style preference can drastically change the value of a stand of trees). This is part of the speculative dimension of land use, but it is important to realize that such a change is instantaneous and not necessarily related to past performance or condition. It changes the traditional concept of time and interest rate.
The value of money based on the amount held will change many times over 150 years. The value of money is related to the amount that you have; one dollar is not the same value as another dollar and thus it is inappropriate to add them or claim they can be added as if they were the same. The value of a dollar differs over time and among people. Nevertheless, we know this and do add them as others do in their economic analyses and treat them as equal in order to form an index for aiding in decision making.
Time is not a constant as used in most financial analysis models. The importance of a year to a teen-ager is not (at least does not appear to be) the same as the importance of a year to a person 80 years old. The second year in the life of a tree is not the same as that of the 50th year. The "next year" like the "next dollar" in marginal analysis needs special treatment. The time-discounting procedure of Overton and Hunt (19_) may be explored.
I was once perplexed by the standard interval for plans. Why 5- and 10-year plans? Why not 3, 13, or 37? Conlin (1973) studied the problem with computer assistance and found that the longer planning horizons had the greater payoffs because any investments in no declining, slowly depreciating, or growing and improving entities or services made had longer to accumulate gains. Uncertainty and risk aversion begged for short periods, while investments in things other than annual crops begged for long periods because time (t) has profound effects in estimating future values (i.e., in (1.0 +r) t). The uncertainties grew as well, suggesting an almost arbitrary mid-term best planning period length, not 5 and not 250 years. We decided to use 150 years to accentuate reasonable time to grow very profitable hardwood lumber, old-growth phenomena in forests, a three-rotation period for softwoods, five sets of 30-year records held to be useful in time-series analyses, a life of a well-built rural structure, the life of an earthen dam, and time to raise and address intergenerational equity issues. We move the planning period ahead one year each year. We believe the objectives should be dynamic and suggest that staff visit them for editing at least every 5 years. They need to have limited built-in flexibility that allows possibilities for cautious adjustment to new directions or conditions at any time (Berkwitt 1968). Different people take different risks; expected return or gain as the decision criterion, not investment amount, or time, or rate … certainly not all together. Expected return is an estimated amount of money from an investment multiplied by the probability of it coming true and is a function of the related factors of proportion of available capital to be invested, the ratio of the probable payoff to the investment, the amount to be invested, the current and immediate likely rate, and the duration of the investment.
Probably fewer than 10 % of the public know about or can comprehend "present value." Acting as if this were true is rational for economic advisors. Studying computed options of discounted value, alone, can provide individuals with financial advantages. By combining such analyses with sophisticated computer-aided land analyses, landowners may become aware of a full range of land products and services. Few people can list them all, much less quantify them, and certainly cannot aggregate them well over at least 30 years and be assured they are making the best selection from among (always) a minimum of at least a million alternatives, investment rates, periods, and the actual value of the dollar. This variability in the factors of economic analyses is well known by economists. It is an "extra" topic in the average economics course. It has been impossible to work with easily, except in the past 20 years after computer development. Now, through simple simulations, it is possible to evaluate the consequences of investment, for example, from various magnitudes (e.g., plus or minus 3 percent) in the interest rate or to do analyses over 25 years and compare them to 45 or 150 years. The problem of "time" in economic analysis is the decision (emphasis, this is a decision, not a scientific "fact" to be discovered or a principal of nature or a natural law and will be a bed-fellow of number from the environment held to be factual) about the proper discounting period.
We invest and work for extra expected production or yield, something higher than would be expected than when the whole process depends on nature only or is identical to the last-achieved production. For example, we can get 80 tons of dry matter per hectare per year in grass, 22 tons of alfalfa hay, 21 tons of sorghum. These are experiment station yields; farmers generally get 10-25% less. In wildlife management, we visit an area and see animals, the starting population that is provided "free" from nature. Investments are made for extra gains, for increased productivity of animals and for opportunities for sightings. If there are no such gains, private investors tend to stop investing, far before populations decline below the original densities (suggested as D in the figure below).
In Rural System we concentrate on financial stability, believing that if bounded sustained profits are achieved for many years, most of the other important not-easily quantified objectives can be achieved. Adequate income, one objective, may be a condition for satisfaction with the others. (We do know of special needs and can create custom systems.) We know that many people are leaving farms and moving to suburbs. The suburbs increase and lands that were once called farms are included in city boundaries. The reasons are many but the major summary: the farms are sub marginal.
Many studies show that people who own small tracts of forest land do no want to "make money" from tree sales. They have objectives of a cumulative list of product units and service units. They will take money from tree sale, conditional upon the sale not disrupting significantly or impairing the other products and services over time. The Rural System analysis is not "tree markets and other forest benefits" but maximizing total benefits to a specified landowner, perhaps by selective tree removals, but also by other uses of the land where there are trees.
A concept of intergenerational justice is present, assuming some degree of thankfulness for the resource inherited and now available for use and management, and intent on providing resources for survival in the future and productive potential of opportunities and options.
Costs
Simple "benefits-minus-costs" accounting is apparently wrong, even to the most unsophisticated analyst. It frequently costs to get costs reduced. If the objective is to minimize costs, the best solution is to stop, drink coffee, or sell the land. The forest account is more than revenue minus costs of harvest. Hawken (1993:13) said that we have to "…internalize the expense of acting more responsibly toward the environment." Costs need to be placed against soil production, against trout production, and as scenic loss. Unless this is done, income accounts are exaggerated.
The costs are distributed throughout the system and are project specific as well as general, because many investments affect many enterprises and projects (i.e., impacting many parts of the system (e.g., communications, transportation, marketing, even unit production by cooperating workers)). The analytical work progresses using continual analyses of the break-even, maximum production, production line, expected prices and expected costs to estimate maximum net profit. Achieving it is the daily Rural System team effort.
Discounting and present value (mentioned above) is a little complicated and surprisingly few students ever master the concept. It is very important because few investment decisions are simple. It helps handle the reality of costs and benefits occurring unevenly over time. "Present" seems to send some people off in the wrong direction. It just designates amounts at some hypothetical time zero. One alternative way of thinking of present discounting is to think of it as finding the "original" value of a dollar put in the bank 20 years ago if the interest rate had been 6 percent. That present value or original value would be 32 cents.
Present value analyses result in the inverse of compounding interest over time. Instead of a small present amount of money growing into a future large amount (as in compounding), the large future amount is transformed into its smaller "present" or possible original value equivalent. Numbers are all brought to a standard value. If a person has $10,000 and wants to discount that, assuming a rate of 4% over 15 years, the discounted value, also called the present value, is $5,552.64. This is the amount that would have had to have been invested at 4%, 15 years ago, to produce the $10,000 now in hand. The present value equation is
N0 = Nt / (1.0 + r)t
Thus, some $1000 in the bank now is there because someone 20 years ago put in an account at 5% interest the amount $ 376.89. The computation takes the amount to time zero. If the period in the bank had been 50 years at the same rate, the initial amount would have been $ 87.20. If it had been working in a bank over 150 years, the present value was $ 6.63. The standard estimate of the future value can be found by a similar process. What is the future value of a dollar (say 150 years at 5%)? The answer: $1507.98. There are complex equations (readily used by computers) for estimating different payments, costs, and rates, etc. In Rural System work we are involved with daily and annual prices and gains but are more concerned about investing for and creating and maintaining a system for the distant future. Time and interest rates concern us more than precise estimates of actual amounts of money or precise estimates of yields. We are quick to see the implications of brief studies of the future value of $250,000 invested today at 6%:
| 50 years | $4,605,038 |
| 100 | $84,825,520 |
| 150 | $1,562,499,100 |
Cost / benefit evaluations seldom consider impacts beyond 50 years because when the values are present discounted over very long periods, the value is very small. (A $10 impact in 150 years (4%) has an apparent present impact of less than 0.20.) The impacts of investments over long periods are ignored because our models are simple and do not accommodate expected but unquantified changes. They give us numbers that we know are unrealistic for the next and for future generations. We know that the rates, inflation, and depreciation will be variable during the long period.
There exists a quantifiable ratio between present and future gains to which a person is indifferent and this ratio can be expressed as the rate of interest. It the rate is 6%, a person would be indifferent to receiving $100 today or $106 one year from today. Another way to phrase the issue is that if we can borrow $100 today at 6% and pay it back at $6 a year, then we can repay the creditor and have something left over. The rule: If the net benefits from a project discounted at a specific rate is greater than zero, the project is financially desirable. If the time stream of costs is assumed to be an investment (e.g., Rural System will invest in improving land productivity) and that investment increases the payoff, the rate of return expresses the interest rate earned on the investment. Different national or regional rates favor different types of investment, some more for the immediate future and small local projects, other for distant and very large projects. The rates themselves are indifferent…we have to work on the projects themselves (on needed plans and programs, not the rates) for they have very different effects over our planning horizon.
We suspect the future value will be great for future people and that is denied by the discounting.
I may be repulsed by the moral and economic arguments for discounting, perhaps made in no particular context. When I do shift to a particular decision situation, I must compare options or alternatives. If I forego monetary or other benefits from one option in order to invest in another one that is "morally right" then the morally right or esoteric value worth can be viewed as being at least that of the benefits foregone. This is the grounding premise of the rational decision maker and justification for doing economic analyses of (and discounting) such matters as human lives and ancient forests and sacred places.
Within the procedure must be addressed whether a future year is the same as a present year? A future tree or human life the same as a present life? Whether a time limit (a planning horizon) is appropriate (and needed for many economic analyses) or should an infinitely long period be specified as implied in statements about the need for sustainability and intergenerational justice? As Russel (1986) elaborated, discounting is accepted, but it runs into trouble when lives or things with esthetic or moral dimensions are discounted. He said that when discounting is done (say at 5 percent for 30 years), preventing 1000 deaths later is equivalent to preventing 230 deaths today. When very long (infinite) time horizons are used, a death prevented in the distant future is worth nothing at the present time. The debate easily slips from one of the analytical framework to morality. Is it morally right to discount the life of a person, an ancient forest, an endangered animal, or a spectacular scene in a public area? Russel (1986) observed that some people believe discounting such topics is evil. There is strong reaction; the issue has slipped far from being one of econometrics.
A tree planted at low cost is assumed to grow to a large valuable tree in 100 years. This tree sale value is called future value. The tree system is a microcosm of the economy, and moral issues are essential parts of the analysis. All trees planted do not live. Tree planters treat seedlings with low regard (there are so many of them and "some will die anyway" is the feeling); speculation is rampart (invest in a tree now for a payoff in 50 years, perhaps only to your children's' estate!) The majestic 200-year old tree is social property (part of the air, groundwater, scenery, and wildlife system -- the essence of the social phenomenon of "place").
If discounting over long periods is to be done, then there is little or no value in anything in the present (related to the disdain for the seedling shown by the planter). Valueless, there is no need for regulations or limitations or protection. How can this be? The procedure is flawed. Economists and others do have misgivings about the results. The procedure does make sense, the computations are consistent, yet the results are dissonant. We are discussing human value and humans, as a population, by many studies, value the present more than the future or the past. The closer to the present, the more interesting, more emphasis, more likely action, the more people are willing to risk. People (as a population) may not admit to thinking a human life 500 years from now is less important than one today but they will consistently make decisions as if that is the case. They will make decisions more beneficial for people 50 years from now than for later than that. Valuing human life is not politically or morally viewed as right, but it is done. Morally, all lives are equal. We argue from pragmatism if nothing else. Discounting anything, even a very large amount, over 100 years or over 500 years makes little difference in the numerical results. The answer is always very small, relatively insignificant in view of any acknowledgement of even trivial variability. Perhaps it is un-justifiable. Nevertheless we do it for classical reasons, for creating a model that begs for revision and improvement, but especially for numerical results that will be helpful in especially contentious or marginal decisions. We struggle for insights for difficult decisions affecting the distant future. There is little help. We use indices that we have available, not counting real value but gaining help in comparative studies among limited competing alternatives, well aware of the limitations and the included variables and their variability. Contentious, nevertheless we provide as much information as we use in making the hard decisions.
We are aware that using a single average rate of investment over a long planning period discounts or makes insignificant the interests of future people. By simulating with computer we can discover what would happen if the regional interest rates on equities changed (as they do), annually. By averaging the discounted amount estimated for each year (resulting from the imposed but estimated rate assigned by the computer from within a range, e.g., 1 to 7%, a more reasonable present-discounted result can be derived for decision making. Where a range of rates is used, selected at random (Newell and Pizer, 2002, Portney, and Weyant, eds. 1999, and Weitzman, 1998) from over a path based on recent past performance of rate change, an effective discount rate can be devised. That rate with inflation and other adjustments can result in a powerful tool for computing present-discounted values, foremost in decision making among alternatives.
For rural crops and livestock, there are often long delays between sales. Some occur over short periods. Within forest operations there are timber thinning costs, fire prevention, road building … all expenditures or investments in different amounts and times before a payoff to a specific objective (e.g., when logging a stand of trees). Comparing alternative timing of investments, either those planned or made, in order to reward wise past work, needs to be done. It is a difficult task. Discounting has many esoteric dimensions and it is widely accepted as being a necessary part of analyses. We do compute discounted estimates and use the results as an index value, one among several. We report:
In our work we do not do conventional benefit / cost analyses, comparing costs and benefits, leading to deciding where limited expenditures among competing options will produce the greatest returns. We have limited funds, know what will be produced "by nature and results of past performance," and ask three questions, expecting answers that are estimates for 5, 50, 100, and 150 years:
The results may suggest making no immediate investment. It includes tradeoffs among benefit generators, and it includes future planned (required) investments such as in scheduled timber harvests. It fully recognizes and accounts the widespread beneficial effects within a system when high-cost investments are made (e.g., for roads, communication systems, and pollution controls).
There is a singular "cost" recorded for the benefit / cost analysis and it is rarely partitioned among the benefactors. Our analytical approach similarly recognized the multi-valued and secondary products of benefit-specific investment (e.g., investing in scenic improvement along a trail with consequences to timber harvest, biotic diversity, deer forage, and trail use diversity, and local employment.) We can ask, under conditions where measurable benefits do not out-weigh measurable costs, whether immeasurable benefits (or inadequately quantified benefits (in terms of risk, value, and real need) make up the difference. We have abundant references to unaccounted costs … called "pollution" and "impacts," even "externalities."
Returning to the concept of variability of time, if investment in a tree bears food for wildlife in 7 years or 10 years, the present discounted analysis shows major difference as compared to yield at 35 over 45 years. Predicting when a biological, ecological, or, similarly, a pollution event or "impact" will occur is very difficult. Predicting an event can be done with high probability; when the event will occur is always done at a much lower probability. The economist asks the scientific community too much; the scientist doth not protest enough. Ability to predict when is limited to a very few realms of knowledge, few indeed among those called environmental. Admittedly it is a topic for social and natural scientists but based on historical progress, we believe it best be handled by "expert witnesses" using all available knowledge and our transition systems. We have seen the debates over discounting among well-meaning people and know that numbers will be used in many ways. Rather than take a singular view, our analysis system presents a limited set of results, options for use in stating a position (or defending against another one being offered). For example, we present (1) trees and areas over time, (2) as well as best estimates of monetary value using fixed rates and times etc., (3) simulations with 3 sets of variability assuming the same decision must have been made 50 times, and (4) starting in "the present" and showing likely future values. Whether to use dollars or other monetary units to compute natural resource and the so-called non-commodity and life-quality values is not debated. We chose both and all and see our analyses expanding (then contracting because we anticipate strong correlations, thus no new information being provided by our investing in model refinement and additions).
The financial advantages of the unusual organization of Rural System also create cost management problems. All groups have a common accounting service within The Q Works (Chapter 11). There are real dangers characteristic of the "Tragedy of the Commons." Each group is independently managed and very distinctive. General leadership is offered; there is group process, but each manager is autonomous. Rather than building an enterprise, as in many other businesses, each manager is building collective profits since these bring group and personal rewards. The costs of Q Works (for the entire enterprise including repayments, described later) are large. After a few years, all groups within the enterprise share these costs proportionally (above a fixed amount). An additional 20% of that amount is charged as cost and spent on approved costs of group enhancement and growth for each of the first 6 years. Salaries and benefits are high and represent the major costs within each group. Capital investments are minor. Merit raises are one of the expected cost increases. (Additional salary incentives are from profits.) Each group pays direct costs for supplies, raw materials, and special services. The gross income minus these costs is the fund distributed by Q Works.
We struggle with how to be very precise in stating our objective(s) so that we can invest wisely in them, and, along the way, gain appropriate measures of how well the system is performing, achieving the objectives, both for specific projects and for the entire system. Developing means for computing is our challenge for it goes beyond classical least-cost or economic efficiency analyses, and addresses modern system management with investments that are for the total system, that have value-adding and synergistic dimensions, that are historical (grounded in succession and production function methods (Chapter xxxx)), tactical, and also strategic, and press to engage systems that are older and longer-lasting than tree-age … for many, at least 150 years.
Whether profit from trees (or set of other products) is used or not in the market, its estimate can inform the rational land owner (public or private) about the dollar equivalents likely to be foregone if alternative uses of the land are made.
Diversity as a Constraint
One of the Type 4 objectives use to design and create Rural System is to achieve a high level of diversity. We think we know what that means, but we know that others do not, for they use that phrase inconsistently for many reasons. We know that we can get positive and negative results from the same data using the published indices to diversity. There are over 20 federal laws related to biodiversity. There are overlapping concepts (and laws and law suits) of racial, age and gender diversity. Every stockbroker recommends diversifying stock portfolios. There are several thousand research papers on ecological diversity. We try to practice what we preach, for we have seen high correlations between some measures of ecological stability and vitality and species diversity. We hypothesize that there is a message in nature for the enterprise: there is likely to be survival value for the long run for species having diverse behaviors to live in diverse environments. There is survival value for named communities of plants and animals resulting from their having many species. Here is what we mean as we seek to achieve an appropriately high level of diversity for Rural System, for we know we cannot find a common satisfactory definition.
In much of the literature of ecology, "richness" is used to discuss the actual or relative number of species. Areas with many species have great richness. Richness and diversity have been used synonymously. Generally there is implied that the more species there are (or topics being discussed), the better. "Many" is the key word and so we accept that as we seek to achieve diversity within the enterprise, we want many subsystems, enterprises, or parts. We have objectives, subject to not losing any species. We work to prevent loss of any native species, however we work to prevent adding exotics and against invasive species (both plants and animals).
We do this on the very general grounds of greed, ownership goals, wealth building, and cultural norms. We also do it on the generalized observation that if one part of a living system fails, others will take over; there is compensation. "Nature abhors a vacuum" remains a general law. In financial systems, where there are many corporations being managed, losses are made less conspicuous when they are part of a large, mixed aggregation of temporary losses and gains. The apparent total seems to be similar over time when there are many enterprises. "Stability" of gains or of system performance seems to quickly enter the conversations.
The number of parts of a system, in this case Rural System itself, is thus an important part of the diversity principle. When there are too many parts, the managerial controls (the span) may be inadequate for them all. Managerial and internal service costs may be too high. When there are too few, the losses of any one can be cast, mentally, as a high proportionate loss. When there are too few, essential dependencies are at high risk. Minor competition or catastrophe can be deadly. Students of wild animals and ecosystems soon learn that when prey (like hares) are abundant, then predators (like bobcats) tend to increase. There is cyclic, "following" behavior, one species is up and the other is down. There is a kind of constancy, a steady state that can be seen on a graph when examined broadly. It comes from many animal species, many different densities, and adaptability. The example can be followed in businesses.
A major recommendation bade by brokers is to "diversity your stock portfolio." The reasons for doing so are like those in nature. If an animal feeds off only one type of food and that food disappears, the animal usually goes extinct. Omnivory is the surviving benefit of individualized diversity. The more wide the foraging/feeding possibilities, the greater will be the life constancy. Similarly, single-interest or single-product businesses often crash. Rural System diversifies in time, space, richness of offerings, and potential resource users. There are over 80 enterprises suggested, each is proposed to be located on or operating from a reasonably large ownership. All are not likely to be equally successful at any time. By counting the net gains from the scheduled total group of activities, then profits can probably be said to be sustained.
In wild animal populations, we know that we can have many species (richness) and within each there is likely to be different abundance. Analogously, there are within Rural System many enterprises and each has a different magnitude or dominance, typically reflected in the capital and budget of each. There are major artificial groups in the enterprise, just as there are major taxonomic categories in ecosystems (e.g., grasses and sedges, mammals, birds, toads, insects). The more recognized categories that are present in an area, the more diverse the natural systems will be called. As in clarifying the stockbroker's suggestion to diversity, the message is to have abundant stocks held within structural categories (e.g., energy, transportation, housing) and in objectives categories (e.g., insurance, growth, and dividends). Rural System treats categories as temporary, purely pragmatic and of no intrinsic value, and readily changed for communication and administration. Similarly, Rural System treats regions. They are human constructs, defined spaces. In ecological spaces, the borders are unclear and changing as factors and influences change. In business systems, regions are defined and change with leadership, energy availability, Internet coverage, and the speed with which people transform physical things into ideas and messages that can be moved electronically.
In ecological work, high indices of diversity (e.g., the Simpson index in the adjacent box) occur when
Simpson Index V = 1.0 - Where there are 3 species, with equal abundance of 120 creatures within each species, and pi is the symbol for the proportion in the ith species.
= 0.3267V = 1.0 - 0.3267 = 0.67 |
The real enterprise issues are those of the diversity of distribution of estimated net returns from sales of units of services, products, structures, opportunities, views, ideas, events, information, inspirations, memberships and memories by all groups as a whole, per rent-valued unit area. Present discounting may suggest how that is distributed daily, seasonally, and over the 150-year planning period (time as another dimension of diversity). Diversifying the source of funds will tend to assure that they stay within the established bounds.
Sustainability (Chapter 8) sounds like a Type 4 objective as in "Develop…subject to sustaining the ecosystem." One of its meanings seems, as discussed above, to be that "whatever you do or decide for your objective, the results should be relatively consistent over time." This is a constraint, a policy or limitation on all possible ways for a system to perform. One of the most fundamental ideas of the business world is that of sustained profit making. It is not likely that it can be made constant, certainly not over 150 years. It can be attempted and approached with special resource-related software as well as prognostic units. The uncertainties of the future cannot be removed for the decision maker, but investment decisions are now made and probably can be made better than in the past, at least with more useable information and thus less risk. I am very certain of, having heuristically converged, constant bounded profits from Rural System.
Discussing Type 4 objectives seemed to require comments about costs, time, discounting, and diversity. We can return to elaborating on the remaining three types. The computation of Q is presented below.
Type 5 - Primary Objectives.
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We specify in the primary objective the unit of measure that we intend to use (e.g., tons) but not the amount. We may want to maximize wood warblers, but also know that a powerline right of way will work against them. We want both…and hundreds of other objectives. We need to phrase the objectives somewhat generally so that the computer optimization system can do its good work. We need to phrase our objectives for the fire tower as "to maximize access of numbers of ideas and tons of supplies." We could have stated an action objective (Type 6) of "to build a 4 mile road" but that would have frozen thought about the other alternatives available to achieve the stated objective that have different costs and timing, e.g., options of radio, telephone, horse or trail vehicle, helicopter drops, … or Martian backpackers.
Primary objectives can typically be expressed for individuals or for groups, and they usually are for long periods (e.g., access to emergency trauma care … now and forever). Each one has the same dimensions as described above for quality of life computations. In developing objectives for rural communities, we have found that there are about 300 readily identifiable and consistently stated ones. Making judgments about their relative importance is difficult but can be done and does not need to be done frequently. We have some evidence that since people are not now very discriminating about the difference in the importance of objectives (they have never had to be for there was no use of such numbers, but computer availability has changed that), and there are so many objectives and the evaluators are often opponents in quasi-political events, and the ecological relations in many areas over the planning period are often surprising, the results provide (1) little discrimination (which is why the arguments persist and that there is such acrimony in public natural resource decision making), or (2) such counterintuitive results result from modeling that long explanations that are needed are bypassed and the results discarded and replaced with "common sense."
Few people appreciate the concept of sensitivity analyses. The system process can typically identify the factor to which the solution is most sensitive. That identified factor may not be evident to everyone and can produce new debate or it can lead to pointed discussions that can allow major cost savings and magnitude changes in the levels of achievement of objectives.
A major primary objective is to build and appropriately harvest phytomass. Building plant mass or net primary production, NPP, can be called a "process" (Chapter 15). Getting a system to do that in the proper places, timing, and for low costs may be considered a primary objective.
I know well that solar radiation drives most rural plant systems and strongly affects animals and structures. While radiation may be "given" or "fixed," Rural System models it to assure managerial control over its major dimensions such as over (1) receptive surface topography, (2) receptive surface color and reflectivity (albedo), (3) growing seasons and reception during those probable periods, (4) changing air-quality and wind effects, and (5) taking action in accord with major periodicities and changes in photosynthetically-active spectra. Optimal decisions can be made among available areas (spots, grid units, or alpha units) based on their energy reception and the amounts or quality of radiation that are desired.
We develop computer simulation and optimization systems based on total photosynthetically active lumens of sunlight received during each degree-day, that is, within the probable frost-free period for each alpha unit. This radiation is known to affect the temperature of the plant environment, above and below ground, but continental and oceanic climatic forces are profound and influence temperature as much or more than local radiation. Thus we treat ambient temperature and soil temperature as separate, independent variables that affect plants. The other variables treated as independent are available precipitation (all types of that which fall minus the runoff (based on slope, soil surface, and vegetative cover) and minus the evapotranspiration. (By accounting fog drip alone, one part of precipitation (the moisture accumulating or tree leaves at night and during fog and rapid temperature change) we can improve estimates of precipitation by 2 to 12% … thus significantly improve estimates of soil moisture deficits, strongly correlated with site productivity.)
We can describe and eventually model within reasonable limits the probable natural vegetation species groups and their amounts on all alpha unit sites. The weight (mass) of plant growth and storage is collectively called "net primary productivity" or NPP. That is the food stock of all animals of all types. Living plants use the decayed substance of their plant and animal associates. There are many ways to achieve NPP to meet human needs. It is at the core of agriculture. Different strategies for production can result in the same net returns. This display of equifinality is important to the modern Rural System manager for it is a challenge to find among the results, the least costly and lowest risk pathway to the same desired result.
We learn from studies of plant aggregates that for most of them, when their conditions are relatively undisturbed by people, can be maintained or changed in desired directions if we:
In natural or wilderness conditions, inputs and outputs of carbon are small. For agricultural and intensively used and worked Rural Systems, carbon inputs (e.g., manure) and outputs (e.g., logs, erosion) may be large. Thus NPP is not satisfactory as an index and an alternative is needed. We begin to use
P* = NPP + CI - R - CO
Where
P* = net estimated desired forms of annual Rural System production
CI = carbon inputs
CS = carbon stored or unavailable (e.g., root mass, tree boles)
CO = carbon outputs
R = Respiration
The sun's energy is stored as organic matter on a site or is exported to other nearby sites and systems. We seek to understand the system balance formulated as:
Yield of weight of commercial (or other desired) plant parts = NPP - phytomass of other above-ground plant parts - root mass - losses to insects, disease, and thieves - unquantified loss (e.g., to adjacent areas by wind and water and to surface and groundwater) - entropy
For natural forested systems, P* is positive, for it reflects carbon gains but all such systems are not positive or carbon accumulators. In natural systems, the factors affecting carbon accumulation, though confounded by a host of relations, are fairly well known as:
In agricultural fields, as a result of conventional cultivation, there is usually loss of the soil's carbon stock and it becomes only positive after additions of organic mulch etc. A key nutrient, nitrogen, requires either high additions (as in manure) or nitrogen fixation by plant complexes. The legumes are well known for fixation but other plants need to be studied and incorporated into Rural Systems for this purpose. Both additions tend to increase productivity. The mass (trees) can influence the amount of future mass (by shading). Inputs (like nitrogen fertilizer) if they are excessive and not related to plant demands will pass through the system, be wasted, and probably be a pollutant in another system. Nitrogen is easily lost and not available to plants and must be added as needed and so we manage for its natural buildup in nitrogen-fixing plants. The costs of analyses to assure proper applications are high; the costs of additions are also high but so are losses and hidden secondary energy consumption costs.
Communities of plants and related animals change in fairly predictable ways. The evident pattern of change has been called ecological succession. It can be generalized as probable community transition and represented graphically and mathematically as production functions. These functions express the site specific expected annual sequence of change in NPP. This is discussed further under Processes (Chapter 15).The maximum average forest rate is 1460 grams dry-weight / m2 / year. That for grasslands and agricultural systems is about 1220 grams dry-weight / m2 / year.
For many crops, there was no significant original harvest, but for trees, the difference between potential harvest of natural production and that for current production may suggest resource "mining" or the production resulting from reasonable investment for the long run. We use the following curve studying the relations of extra yield or ((yield - origin) x value) and report the comparative costs and gains under optimum management, current recommendations, and that from current areas without management, either "average" or classical management.
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A = Potential outputs may exist even with no input or investment.
D = The straight line is that of equal value, a dollar received for a dollar invested. Outputs are often difficult to express in dollars but here we assume a fuzzy value can be estimated. Here a series of hypothetical, discrete investments (Inputs) are considered and plotted with estimated outputs.
B = The amount of input for producing the maximum net yield, the maximum distance between the production line and the equal-value line D. This is the investment for the maximum system efficiency, greatest output per unit of investment.
C = The maximum output shown on the production line. It seems counterintuitive that B is the best level of investment.
E = The breakeven point. Declining production suggests an unstable system and probable failure to protect it for the future. A rational investor stops investing here, probably before this level.
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Other concepts are suggested by this input-output curve as we deal with the uncertainties of production and prices.
A = At A on the graph no investment, conditions are like those of the hunter-gatherers, living off of the land. Even these people expended great energy to achieve population stability. System building is seen as the production line, P, increases rapidly with small investments.
B = Starting with some input, some needed in almost any operation (e.g., the tractor to haul the tree to the roadway for marketing); some gains are made and may be below the D line (where there is equal value of inputs and outputs).
C = A straight line relationship for D seems unlikely. Here, C suggests a general decline in returns on investments related to administration and coordination as well as environmental externalities.
E = Similarly, the straight line relationship of D may be poor for large investment. There seem to be needed extra returns or gains per unit invested compared to small investments. A dollar spent for bread is not the same as a dollar spent for jewels. The assumed shape of the "equal-value line" influences the distances, G or H that determines the point of maximum system efficiency.
F = Maximum efficiency using the equal value line, D, as above.
G = If line C is assumed, the point of efficiency shifts to the right.
H = If line E is assumed, the point of efficiency shifts, responding to the distance between the production line P and H.
J = Maximum productivity may be the same as maximum efficiency over a broad range if line E is the correct one to use. The distance H may be the same over a wide range of investments. System protection concepts probably need to be incorporated at this point.
K = The breakeven point may shift with assumptions about C or E.It would seem that the target for total system stability is at the level suggested as F if the D line is valid.
We continue to analyze such curves and relationships as we change "Output" to "extra production or yield" and predict changing value per unit. Ability to make timely discriminations about F, G, and H based on computer simulations gives Rural System special power in advice for Tract owners.
All estimates are confounded by assumptions, moisture, length of the growing season, species differences, past land use, pest and diseases occurrence, and cultural systems. The precision of the value of the maximum will probably be improved with research, but for comparative and scoring purposes it will be stable and change (if needed) presented in a regular formal 5-year announcement.
I resist going into much detail about the measurable objective but it seems essential as grounds for basic understanding and the assumptions in the system design. I cannot communicate too precisely the importance of precise objectives for a stable, profitable system. Any part of a system may fail but I am sure that systems will fail if the objectives are not precise and well described and under rigorous feedback action.
Crop specialists are interested in NPP but usually only specific parts such as grain or tubers. The Rural System person is interested in these commodities and their yield but also other specific, measurable, accountable benefits that can be gained from the same land area on which the net yield of financial gain occurs.
As complex as striking a balance among plants appears, the topic of practical importance is the estimated net present discounted value of the yield of commercial plants or plant parts (P) and P is a function of world markets, transportation systems, political systems … even the existence of nearby or managed enterprises (such as within Rural System (due to economies, market recognition, competition, innovations, and efficiencies). There are yet-to-be-quantified contributions of all of these to fauna or so-called "secondary production" of ecologists. The equation can be re-written and further developed with the "yield of commercial plant parts" (e.g., pasture forage) as the dependent variable, then substitutions made. Yield may be expanded to include all yields, many of which are not plant parts. That then becomes meaningful when combined with estimates for discounting as, grossly, past yield and the unit value or
Profits = (original or natural yield + expected additional yield from investment) x (probable harvest value of a unit of yield) - costs
The costs are distributed through the system and are general, impacting many parts of the system (e.g., communications, transportation, marketing, and even unit production by cooperating workers). The analytical work progresses from continual analyses of the break-even point, maximum production, production line, and maximum net profit, then the appropriate bounds on the upper and lower limits for production that assures sustained or continued profits. One rule of the system, a conservative one, is that the stable nutrients removed in achieving P* must be replaced. This amount is estimated from simple ash analyses. We know that in many forest areas, the nutrient pool is very large and not likely to be depleted in a few years. We work for the distant future. Cropping and logging are extractive. The effects of this land-mining are beginning to show. Call it "fairness" or just attention to production processes, but we know costs of replenishing nutrients now will be less than costs in the future. We tend them well now, hold on to them (for the costs of replacement are high), and reluctantly (because of extra costs) build to levels needed for profitable crop and animal production.
People working within Rural System and those dependent upon it are usually interested in specially-valued parts of NPP. Fundamental ecologists would probably be interested in NPP but we work with parts, using NPP as a maximum; it is solar-input determined and limited. I know of no concept allowing greater than NPP (a number like 100 percent engine or mechanical efficiency), thus it may be a maximum concept and a base for expressing a relative standard. By using it, I can then analyze approximate costs associated with fossil fuel inputs to the Rural System and the costs related to gaining desired system production and loss reduction (e.g., erosion control, pesticides, and pollution control) and management (the cost of positive or negative change). Site specific and cumulative expected Rural System yields can be compared to maximum NPP for any site. A score using this baseline can be created and used with other scores expressive of total system performance.
Type 6 - Action Objectives
"To fence 5 acres on the west slope" sounds like an objective. It is, but it differs from improving the farm, having a good herd of cattle, improving the discounted return from steers, working safely in the field, preparing for advanced rest-rotation of pastures, and minimizing cubic yards of stream bank erosion. "To fence 5 acres" may have all of these other types of objectives and it may also have scenic, health, wildlife, and water quality objectives. We like to be called "action oriented" but we prefer to analyze objectives first so that the action is very specific and for the right reasons and likely to be profitable. "What project will we do?" is not a good question. It is probably wrong. We need to decide on objectives, get help in naming possible ways to achieve them, then in making the tradeoffs in how we are going to spend our precious-little time and money to achieve those objectives (and little else) … and then writing them so that we can be accountable for our decision. Each action needs to have an answer to "why?" and that answer needs to be phrases in terms of all of the weighted objectives it attempts to achieve at what cost. An action objective is a statement in a short-term plan, a task, a project … intended to achieve other objectives, probably not stated. It, as other objectives, is intended to reduce the difference between the actual and the desired conditions … also probably not stated.
"To build three bird houses" is an action objective. It probably reflects other objectives about birds and their dynamics, backyard beauty, and therapy for the mental well-being of the craftsperson.
Type 7 - Futuristic Objectives
At the time that plans are written or formed, they are about the future. There need to be clear reminders, even requirements in modern systems, which actively encourage planners to predict and develop the dimensions of feedforward. These include making studies in futurism, mathematical prediction, scenario building, and futures conferences and actively using the results in current decision making.
Objectives seem fixed. They need to have a degree of permanency, especially in systems that have slow growing or slowly-changing dimensions (e.g., forest trees; Staff may implement a system to achieve a harvest in 50 years for a payoff. Changing staff or changing objectives may effectively negate that action and all of its costs as well as premises.) It is reasonable to have an objective of evaluating regularly whether the objectives need to be re-quantified or otherwise changed.
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In Rural System we concentrate on financial stability, believing that if bounded sustained profits are achieved for many years, most of the other important not-easily-quantified objectives can be achieved. Adequate income, one objective, may be a condition for satisfaction with the other objectives. We know that many people are leaving farms and moving to suburbs. The suburbs increase and lands that was once called farms are included in city boundaries. The reasons are many, but the major summary: the farms are sub marginal.
In the list below I have listed the gross likely profit from an average local rural land ownership in 2005. The numbers provide an example for an hypothetical 65-acre diverse farm area with land, house, and buildings valued at $3000 per acre, thus total value of $195,000. The gross 30-year mortgage at 6% is $33,951 per year. Notable:
Rural System can offer conservatively to a owners with their land under contract as a Rural System Tract:
The total estimated annual financial addition for this hypothetical average 65-acre Rural System tract is $ 11,420 and given estimated productivity of $25,440, Rural System brings the annual income to $36,860 to meet and exceed the required mortgage of $33,951. All of the production estimates are "average"; all of the gain estimates are conservative. Gross Rural System estimates bring a slightly sub-marginal farm with over-valued land and house into the range of being in a profitable state. The Rural System affiliation brings additional land owner income as a member of a diverse, growing conglomerate with profits expanding with additional enterprises, incentives, franchises, e-commerce, and enhanced land productivity grounded in computer map data and models.
Assumptions needed are many and difficulties with them seem to compound. Costs are not included in the annual averages, but assumed to be at least the same as priced yields for a break-even operation. In the example being discussed, we have a nearly-marginal operation … and evidence abounds that farmers are leaving farms at unbelievable rates, and urban expansion in number of people and use of rural land for residential/commercial areas is great. Gaining profit from owning land increases with inflation, diverse structural development, and speculation, rarely with crop, forest, and livestock production. Producing food and fiber remains important; fossil energy availability is a new uncertainty; high land value for rural housing requires good water and natural scenery; extending urban services to dispersed rural residences and corporate offices is costly; rural employment and village stability is essential by many criteria.
Profits from invested annual income from Rural System Tracts can likely far exceed the value of any managed wood harvested at the end of a long investment period on that tract. We are not seeking "charitable contributions from logging income," as someone suggested. The annual financial gains are pooled from
These gains include annual timber logging returns from Rural System Tracts. The owners of Tracts receive about 50% of the profits of the entire enterprise (these are tentative approximations, viewed as corporate costs, and based on the description herein, and computer work will determine optimum distributions). Based on the acres (a potential-production-weighted acreage based on an index (including site index, ponds, streams, roads, etc.)) within the participating land ownership, the owner shares in a proportion of the annual profits. The more money made, the more both enterprise and owners benefit, all subject to the constraints of sustained profitability and those imposed by the land and climate … and future investments. The 50% remaining after disposition of 50% of profits to the owners of tracts will be distributed by Q Works. The initial distribution is as follows:
Benefits to business cooperators and collaborators are based on contract decisions and are view as direct costs to Rural System.
With extensive reports of actual and probable gains, land owners receive a report on the probable impact of implemented recommendations on regional quality of life. This may be evaluated as a benefits index for the land owner and used subjectively with the reported costs and other benefits. The Index is described in Chapter 9, Quality of life.
Venture Capital or Line of Credit
Development capital for Rural System is needed to implement all of the units or enterprises within the first 3 years for stability and continuous development. Most groups within the enterprise must be started at the same time or the unique, essential advantages of system-assisted interactive work will not be gained and the enterprises will probably fail. We believe that there will be individual investors having specialty interests in many of the groups, so a large single-source investment suggested as being needed may be misleading. The enterprise can be profitable at the end of 7 years following an initial investment estimated as $3 million. Incentives from a $1,000,000 "line of credit" will allow work to progress cautiously in these new and unexplored ways with speed (though often with staffing delays for the new organization), reduced risks, and reduced interest charges. Driven by local investment capital and incentives, the shared profits will build the enterprise rapidly.
Only modest, rather than total, enterprise development might be selected. It reduces risks in managerial skills but increases the risks of the total system failing to perform at expected levels. It delays the development of the total system by many years. Estimates made to date are based on all units being operational. Making estimates for unknown combinations and permutations of the presented enterprise units is impossible. An evident strategy of picking the sub-units or groups that have the highest returns and lowest costs will not work, any more than creating an organism by combining a heart, a lung, and a foot. Some groups, at least by the middle of the second year, will be profitable. Conservative estimates suggest profits by year 7, that being strongly influenced by an effective Q Works (Chapter 11) and by supportive ancillary units being developed well. Complete failure of any unit (though difficult to imagine) does not jeopardize the success of Rural System.
The financial analyses for Rural System itself are complicated by assumptions about starting times, activities, and groups with which to start. All should be started at about the same time, depending on financing and securing enterprise managers. All starting will assure maximum positive interactions and the benefits of diversification. We have found comparable financial information for closely-related activities but many groups shown here have never "worked" because they were never within a large system. As always, a poor manager, a recession, or a catastrophe can deny any estimate of success. When each enterprise is described and its potential suggested, then profitability seems likely but also employment, youth activities, a growing tax base, continuing work to improve the quality of the environment.
We have noticeable payoffs for individuals as well as the region. We have designed a system that will provide financial and other benefits to current citizens. We have designed a means to stop begging for grants and gifts to restore and preserve the environment. We have dodged the tendency to ask for tax funds. In fact with maturity, funds are provided to the people and the region and to improving the land productivity. We have found a means partially to support and perpetuate the benefits from lands if they are placed under easements within existing programs. Herein we are not advocating creating such easements, simply noting that such dedicated lands can be brought along with other rural lands under sophisticated management in the region. We have found the e-catalog as a way to provide a financial base for assuring benefits from regional beauty as well as from its commodities and the good work of its people.
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