01/17/2014 11:28 am ET Updated Mar 19, 2014

Finding the Promise in Promise Zones, Part 1

President Obama's designation of five localities as Promise Zones is the latest in a long history of efforts by his predecessors to wage the war on poverty in communities where the war is needed most.

It's a good idea, if it is done well. It would make little sense to put new financial resources into the same strategies and power structures that have created and perpetuated the poverty that exists in parts of the United States today.

The Promise Zone initiative is starting small. Federal resources permitting, it has the potential to be a productive new campaign in the war on poverty that President Lyndon Johnson declared a half-century ago. It is reminiscent of the Empowerment Zone and Enterprise Zone programs under the Clinton Administration. Then as now, the idea was to give special tax breaks and treatment in grant competitions to neighborhoods, communities and regions that are struggling economically and socially.

Today, however, there are new factors in the mix. One is global warming. Its impacts often stress the communities and people least able to cope because they lack resources. The resources in insufficient supply are not only money, but also "natural capital" including important ecosystem services that have disappeared because of environmental degradation. Those services range from flood control to water purification. One way to address poverty is to help communities restore their natural capital.

If the Promise Zone program continues, it could also address economic stress in those communities whose prosperity now depends on the production of carbon-rich energy and whose boom will become bust as the United States makes the transition to clean and renewable energy resources.

The program will need to redefine what constitutes a good business climate. A community that lacks adequate fresh water supplies, or whose energy supplies are unreliable, or whose public health is threatened by bad air quality, or that's highly vulnerable to extreme weather events probably is not a good prospect for new businesses and jobs.

For those reasons, the Obama Administration's program should help struggling communities achieve not just economic development, but rather sustainable development. That means development strategies that recognize how ample supplies of clean locally produced energy, fresh water resources, healthy ecosystem services, and resilience against extreme weather events are as vital to a local economy as educated workers, affordable taxes and good transportation systems.

One useful formula for economic revitalization was devised years ago by Michael Kinsley at the Rocky Mountain Institute. It consists of four simple sequential strategies for restoring the health of struggling communities.

First, jettison the idea that the best way to create jobs is to recruit outside companies. This is the lottery approach to development because relatively few new industrial plants are built in the United States each year and few communities succeed in the competition to host them. The first objective should be to plug leaks in the local economy.

One such leak is the loss of energy dollars because of poorly insulated buildings, car-dependent and poorly planned transportation systems, inefficient municipal services or excessive dependence on energy from other places. By one estimate, about 75 cents of every energy dollar immediately leaves a leaky locality. Every retained dollar, on the other hand, produces a multiplier effect. In other words, it creates several times its value as people spend it on local goods and services.

Second, create the conditions that help existing businesses thrive. For example, aggressive energy efficiency efforts by local governments can lower or slow the growth of property taxes.

Third, identify value-added opportunities in the community - opportunities to make things from local resources rather than exporting raw materials. It's better for timber to leave a community as furniture than as logs, for example.

Fourth, go ahead and enter the national lottery for recruiting new companies to town. The first three steps will make the community more competitive.

There is a fifth important strategy beyond the RMI formula: Involve local people in deciding what prosperity means, how it would be best achieved and how incoming resources should be targeted and managed. In some communities, powerful special interests control resources to serve their own ends. They are vested in and work to perpetuate the patterns that created poverty in the first place.

Appalachia comes to mind. The coal industry largely controls the political system there. The region's poverty has deep roots, including the fact that much of the land and its minerals are owned by outsiders - absentee landowners who bought land and mineral rights for pennies generations ago. Mountain top removal mining is causing cultural poverty because the region's hills and biodiversity are a large part of its soul.

In many American communities, poverty is not simply a matter of money and the solution to poverty isn't either. Well-intentioned federal programs, which have yet to succeed in places such as Appalachia, need to identify and focus on poverty's deep roots, and they need to democratize the planning and control of economic, social, cultural, human and environmental development. More about that in Part 2.