“Always design a thing by considering it in its next larger context – a chair in a room, a room in a house, a house in an environment, an environment in a city plan.”
   – Eliel Saarinen (Finnish-American Architect)

To put Saarinen’s quote to the test, imagine trying to move an acre of Costa Rican tropical jungle—plant by plant, shovel full by shovel full of dirt, insect by insect—to the Sonoran Desert of Arizona. Without moving the environmental context the jungle evolved with, such high rainfall, aluminum rich soils, and lack of frost, death is certain. 

The Ecological Insight

Context is everything. Every patch of habitat on Earth, from the Sonoran Desert to the tallgrass prairies, and from Costa Rica’s lowland tropical jungles to Alaska’s Arctic tundra, has evolved within a unique environmental context. The alpine tundra of Colorado thrives exactly where it does due to the suppressed oxygen content 13,000 feet above sea level, high winds, arid airmasses, etc.

Thousands of regional ecosystems exist on Earth, such as the Southern Rockies Ecoregion of Colorado. But even this ecoregion harbors dozens of more distinct ecosystems within (e.g., aspen forests, ponderosa pine forests, etc.), each suited to an even more particular context. For instance, animals such as elk and eagles can migrate freely from a ponderosa pine forest (west of me) and the shortgrass prairie (east of me). However, each ecosystem maintains a distinct character, unmistakable to the casual observer (Figure 1). 

Figure 1. Two distinct Colorado ecosystems, just five miles apart. Left: ponderosa pine forest. Right: shortgrass prairie.

Understanding our Context (Through the Lens of Stability and Scale)

In economics and in ecology, system stability stems from high degrees of resilience and resistance, which are both increased by diversity: the diversity of species in an ecosystem, and the diversity of businesses in an economy. But to fully grasp the concept of stability, we must understand not just the context of the ecosystem or economy in question, but the geographic scale of each system.

For example, applying the concept of stability to a population of rabbits, we would conclude that stability is impossible. In my home town of Fort Collins, Colorado we are experiencing an epic increase in rabbit populations as of this writing. In a few years, this boom will be followed by an increase in fox and coyote populations, and rabbit populations will decline, etc.

To find something more stable we need to look beyond individual predator and prey populations. But even for an entire ponderosa pine forest stability can appear impossible. If we build observation towers at each corner of a one-acre patch of forest (e.g., a hill at 7,000 feet elevation in Larimer County, CO), and study that patch over time, we would discover that its structure is in constant flux. Wildfires rip through regularly, at times converting the entire forest to ash. The patch typically regrows as a meadow at first. Over time, the meadow begins to grow back into a forest—which is likely to burn down again, or suffer a pine beetle epidemic, etc. It’s far from stable.

We need taller towers, and we must move them back far enough to observe the forest ecosystem of Colorado’s northern Front Range. At that scale, we finally witness an ecosystem that has a persisted for 1,000s of years—as a network of forest and meadow patches. Some patches are dominated by tree canopies from edge to edge, unburned for well over a century. In other areas the canopy is broken up by open meadows, recently burned areas now full of grass and insect-pollinated wildflowers. Dozens of unique patches lie somewhere between these extremes. The environmental context of this region—frequent wildfires, coarse porous soils, cold winters, and low precipitation—supports a unique network of habitats we know as the ponderosa pine ecosystem, which in turn support a great variety of wildlife.

One of those species is the Abert’s squirrel, which is dependent on ponderosa pine ecosystems (e.g., they may not exist if not for the persistence of these forests). Abert’s squirrels rely almost exclusively on ponderosa pine trees: they eat seeds from pine cones, the rich inner bark of branches, and even pine pollen.[1]

The Economic Insight

After a recent seminar at Colorado State University, as student asked a critical question: “Why did you choose the region as the optimal scale for a sustainable economy?” The answer, as in ecology, also hinges on scale and context.

The context of our economy is an interwoven fabric of highways, warehouses, forests, government buildings, cultural values, farms, and countless other factors. Context is what we experience on the surface in our daily lives, one part of the big picture. For convenience, the context of our economies can be partitioned into three parts: social, environmental, and industrial (SEI context, Figure 2). The SEI context where you live is as unique as a human fingerprint, and Earth is covered with thousands of them.

The social context includes a wide variety of cultural values (e.g., clothing, food, and religious preferences), as well as the innate skills and abilities of a people. Social context also includes perceptions of wealth and poverty, forms of governance, and aversions or attractions to technology and productivity.

As important as our social context is, our environmental context can often wield even greater influences on our economy. Environmental context includes factors such as soil fertility, precipitation, and geology (e.g., ore for making steel or aluminum). Our environmental context also includes the quality of natural resources (e.g., how rich are the forests and how abundant is the groundwater), elevation, and biological diversity. Social and environmental contexts have great influence on an economy’s productive capacity.[2]

The industrial context of an economy includes factors that are neither environmental nor purely social in nature. This includes the quantity of trading centers such as cities, businesses, and industries, as well as the connectivity of those centers (e.g., highways, railways, and waterways). It also includes the type quantity of usable energy available in the economy:  hydroelectric and solar energy, fossil fuels, biomass energy, etc.

Figure 2. The Social, Environmental, and Industrial Context of our Economies, which form critical feedback loops with an economy’s foundational components: diversity, energy, and trade. Image by John H. Giordanengo.

Embracing our Context Drives our Innovation

Embracing our context, rather than viewing it with disdain, human ingenuity can be unleashed to generate local solutions to social, economic, and environmental challenges. And in economics, such solutions (innovation) are essential to productivity gains. In Colombia’s Llanos region, the community of Gaviotas has pioneered novel solar and hydroelectric systems, together with extensive reforestation efforts, to transform their economy into a stable and productive state, even in the face of social upheaval throughout Columbia.[3]

Our SEI context is continually interacting with an economy’s foundational components—diversity, energy, and trade—in search of balance. In the U.S., trade policies have created a continual transfer of resources (e.g., lumber, food, clothing, etc.) from widely different SEI contexts around the globe into regions such as the arid front range of Colorado. The result can be an “artificial” increase in population (i.e., exceeding the carrying capacity), to a point that a region cannot sustain its capacity to produce adequate food, clothing, lumber, and meet other basic needs.

Energy, another foundational component[4], can also lead to “artificial” population increases in every community on Earth, with unintended economic impacts. A case in point is Sri Lanka, covered in the The Pins that Popped Sri Lanka’s Balloon Economy.

How Small is Too Small (for an ecosystem or economy to persist)?

In the early ’90s someone did in fact try to transplant a tropical jungle to Arizona: Biosphere 2. To avoid immediate collapse, the jungle was protected from the harsh desert environment of Arizona via a glass-domed structure—a very large terrarium. Eight humans began living in the terrarium, to study the complexities and challenges of life on Earth.

One challenge was a dangerous drop in oxygen levels, down to 14.5%, threatening the “Bioshperians” inside.[5] This was cause, in part, by soils that were too rich in organic matter, bolstering bacterial populations that gobbled up oxygen while emitting high levels of carbon dioxide. The Biospherians spent over 20% of time on maintenance and system management (e.g., installing and managing oxygen pumps), replicating services that natural ecosystems would otherwise provide freely. Significant labor was spent managing out-of-control ant and cockroach populations.[6] The system was far from self-regulating (sustainable).[7] It required continual external resource inputs (e.g., maintenance of natural ecological functions by people, carbon scrubbers, oxygen infusions, etc.) to persist.

Regarding scale, Biosphere 2 was too small to harbor, for instance, the diversity of insects required for pollination, or the diversity of birds to consume fruits and distribute seeds to regenerate the forest over time. The birds, mammals, pumas, and other species the jungle requires to operate optimally require far more than a few acres to maintain sustainable populations over time. Without predators such as snakes or lizards, insect populations were not in check.

Christian Werner, a Biosphere 2 researcher, created a drought in the rainforest—a disturbance in the middle of the growing season. Some plants suffered, but the diversity of vegetation present allowed the plant community to “cope with the stress in beneficial ways, helping to maintain key functions for the entire system,” Werner explained. “Adding that biodiversity is therefore key to keeping forests stable in turbulent climatic times.”

Similarly, our economies cannot sustain critical functions and processes at such a small scale. At the opposite extreme, trying to manage trade and energy at a global scale—across thousands of radically different SEI contexts—makes a sustainable balance virtually impossible for the nations and communities involved.

Restoring Regional Watershed Economies

Six reasons to focus restoration strategies on a regional scale (rather than a global scale, or at the scale of a small city) are:

• Basic Needs: The raw materials and products (e.g., lumber, ore and recycled materials, water, food, etc.) a modern consumer needs require a patchwork of urban and rural landscapes, which exist across entire watersheds and regions (e.g., multiple counties in a state).
• Cost Efficiency: To develop appropriate economies of scale[8] for many modern products (e.g., small appliances, finished food products, household staples, bicycles, etc.) requires a large-enough marketplace to maintain acceptable prices.
• Collaboration: Productive competition between businesses, collaborative solutions within industries, and other collaborative strategies operate most efficiently at scales larger than one town or one county, in regions large enough to harbor multiple businesses in the same industry.
• Energy Security: The diverse renewable energy system required to ensure stable energy supplies occurs on a multi-city or multi-county scale, often within a larger watershed (e.g., South Platte watershed of Colorado harbors hydroelectric, solar-voltaic, biomass, wind, and other renewable sources, which balance each other well over time),
• Expression: A region may be where an economy’s mix of social, environmental, and industrial factors (context) expresses themselves most fully. I like to refer to this as the natural geography of our economies.
• Self-regulation: The smallest scale at which a modern economy can function in a self-regulating (sustainable) manner, and deliver products and services efficiently, is the region (i.e., the region is the basic operational unit of sustainable economies).

An abundance of ecological and economic theories imply that energy and trade reach an optimum balance at regional scales[9] (i.e., a scale where diversity and productivity are sustained at peak levels). In many states and nations, the watershed is a natural landscape feature that provides a convenient boundary for regional economies.[10] In Colorado, for instance, the South Platte watershed harbors dozens of counties and cities within this unique SEI context (Figure 3). The watershed’s diverse energy and material resources can be leveraged by the skill and innovation of its people, working to mold the economy to the realities of this SEI context, rather than attempting to circumvent that context.

Figure 3. The proposed South Platte Watershed Economy of Colorado has a unique SEI context, relative to five other Colorado regions. Economic restoration focuses on policies, programs, and industry solutions that rebuild a region’s balanced trade pyramid,[11] create energy neutrality,[12] and increase economic diversity.  Map by Amy Randell.

Could the South Platte Watershed Economy restore its capacity to, for instance, produce more than 70% of the goods it consumes, with the renewable energy sources the region naturally provides? Necessity being the mother of all invention (i.e., the principle of scarcity in economics, constraint-based creativity, etc.), the answer trends more towards yes than no. However, the right policies and programs must be in place, to stimulate regional and state-level trade, increase the renewable energy capacity of a region, and increases economic diversity.

Diverse economies yield a wide range of economic and social benefits besides productivity, the subject of the The Power of Economic Diversity. One of those benefits is to bolster a community’s buffer future against economic a wide range of global disruptions in this volatile century.

About the Economic Restoration Institute

The Economic Restoration Institute works to identify and implement policies, programs, and industrial solutions to help regional economies attain a sustainable state. If you are interested in transforming your community, region, or industry, reach out to ERI at info@economicrestoration.org.

About the Author

John Giordanengo is the author of Ecosystems as Models for Restoring our Economies (To a sustainable state), and the president of the Economic Restoration Institute. His research and investigative interviews from around the U.S. and the globe also support his blog, Eco-Nomics. John’s work is inspired by the awe of nature, music, and our shared human struggle.

Publication Note

Portions of this article were originally published in Eco-Nomics by J.H. Giordanengo, and are approved for cross-posting here.

Notes and Literature Cited

[1] Morey, G. 2019. ‘Abert’s Squirrels – friends to the Ponderosa Pines.’ Animals. San Juan Mountain Association.

[2] Productive Capacity: The ability of an entity (e.g., nation, region, industry, or business) to produce goods and services now and in the future. An entity can raise or lower its productive capacity by manipulating factors such as the quantity and skill of workers, entrepreneurship, natural and economic resources, and technology. At a given level of GDP, an economy’s productive capacity increases with the efficient use of resources.

[3] Weisman,A.2008. Gaviotas: A Village to Reinvent the World,2nded.;ChelseaGreenPublishing.

[4] Foundational Components: The components of an ecosystem or economy that are most responsible for maintaining system properties such as net productivity, resilience, resistance, and so on, or for maintaining a state of dynamic equilibrium in the presence of turbulence and other external forces. The dynamic interaction of a system’s foundational components, and the proper balance between those components, is responsible for maintaining the system in a self-regulating state. Foundational components (e.g., diversity, energy, and trade) form predictable interactions, regardless of the context in which they operate.

[5] Cornelius, K. 2021. ‘Biosphere 2: The Once Infamous Live-In Terrarium Is Transforming Climate Research.’ Scientific American. https://www.scientificamerican.com/article/biosphere-2-the-once-infamous-live-in-terrarium-is-transforming-climate-research/

[6] Nelson, M. 2018. Biosphere 2: What Really Happened? Dartmouth Alumni Magazine. May – Jun 2018 Issue. Accessed 21 September, 2025. https://dartmouthalumnimagazine.com/articles/biosphere-2-what-really-happened

[7] Sustainable refers the ability of a community, region, or nation to meet its economic and social needs into perpetuity, without jeopardizing the ability of other communities or nations to meet their needs, and without impairing the health of ecosystems we rely upon. The terms self-regulating and sustainable are used interchangeably herein, for a self-regulating economy cannot, by definition, exist via continual external resource inputs from beyond its boundary. Nor can a self-regulating (sustainable) economy persist from activities that continually degrade the social and environmental resources required for its survival.

[8] Economies of Scale: The financial advantages gained as a company increases its production quantities (relative to its operational costs), leading to a lower average cost per unit produced.

[9] Giordanengo, J.H. 2025. Ecosystems as Models for Restoring our Economies (to a sustainable state). Anthem Press.

[10] Watershed: A geographical area within which all water flows by force of gravity through a network of natural drainages to a common river course. Nearly all free-flowing rivers (e.g., those that are not impounded by a dam) flow to a sea, gulf, or ocean, except for those draining into subterranean basins by means of porous substrates in which they exist. Watersheds exist in a nested fashion, whereby the largest watershed unit (e.g., Columbia River Watershed) is comprised of smaller watersheds (e.g., Yakima River Watershed), which is comprised of smaller and smaller watersheds as each additional tributary is joined by a subsequently smaller tributary.

[11] Balanced Trade Pyramid: A conceptual representation of the production and distribution of goods and services, with productive industries representing the base of the pyramid (e.g., extractive industries, renewable energy, and waste-to-resources), contributing more to GDP than each successive tier above. In each tier of the triangle (e.g., manufacturing, wholesale and retail trade, professional and government services) the relative contribution to GDP is lower than in the tier below. Foreign and carrying trades represent an ever-smaller portion of wealth accumulation at the top of the pyramid. A balanced trade triangle represents the importance of productive industries in sustaining regional and domestic economic growth.

[12] Energy Neutrality: A condition whereby the total quantity of energy consumed by a business, home, industry, or economy is met by endogenous energy produced in that same business, home, industry, or economic space.