Extending Personal Barter in Post-Disaster Scenarios

Online bartering grew an estimated 100% between 2008 and 2009 (more recent statistics unavailable). Barter networks have advantages in a sagging economy. Businesses can trade excess capacity to reduce overhead expenses. A dentist that wants to work 40 hours per week who only has 35 hours booked might trade five hours of service for office supplies. Consumers can exchange unwanted goods for unearthed treasure. That unused washer/dryer sitting in someone’s garage could become a nice guitar for a child’s birthday.

Barter has its obstacles. Without a common currency or ability to comparison shop, it’s hard to know if the trade you’re getting is fair. Not all goods are easily commodifiable. Is a used winter coat worth the same as a three course meal that a stranger prepares? There are also administrative and logistical hurdles. Shipping costs for large items or transportation costs to access services can limit barter to local communities. Tax laws can be punitive. While no cash is born of the transaction, taxes might still be owed, requiring barterers to have alternative sources of income. Finally, barter often requires a double coincidence. Finding a counterparty that wants what you have and has what you want can take more time than your plans can afford. As a result, barter is more common for wants than needs.

Online business-to-business barter exchanges value goods and services based on actual currency at “rack rates” to overcome some of these obstacles. A typical exchange charges a set up fee in the $500-1000 range, monthly maintenance fees in the $10-25 range, a 6% transaction fee for the fair market value of barters, and interest on borrowing services before earning “barterbucks” (to cover default risk). As part of a broader economy that has an official currency (and therefore pricing signals), monetizing the value of goods and services can provide the basis for (financially) equitable exchanges.

The internet also levels the playing field. Auction sites such as eBay provide pricing information on a wide variety of goods. Feedback on prior transactions weed out dishonest traders. For services, sites provide user-based quality ratings and written comments that help explain differences in price.

For all of the advantages and technological improvements that have fueled growth, personal barter still has not overcome the limitations of the one-to-one model. Perhaps this is because, in the most developed nations that have wide internet access, most people have sufficient resources for needs and consider barter primarily for wants. Further, the lack of a one-to-many system for individuals would make barter for necessities unreliable without the personal relationships that could transcend a market system.

Consider a post-disaster scenario in a less-developed area. Governments and NGOs provide food and temporary shelter. Temporary gives way to permanent as funds quickly run out. People are stuck in crowded shacks and demoralized by the failure of government to live up to promises. People realize that they must rebuild with their own limited resources. But how will they organize? Funds are limited and used for necessities. There might be surplus goods and services, supplies, skills, and trainable labor in the community but no individual can shoulder the burden of rebuilding a neighborhood. No one wants to be the first to rebuild without the reliable promise that others are also committed to rebuilding. Communities fail to reemerge from the dearth of reciprocal economic signals and inability to organize a collective response.

With a one-to-one system of barter, it could take months to set up the complex series of exchanges it would take to rebuild a house, much less a neighborhood. If I help you salvage wood to rebuild your house, who will cook for me? Who will take care of your children while we are away? Where will we find an architect? Plumber? Electrician? Technological limitations such as minimal internet adoption magnify the collective action problem in less developed areas.

Now imagine a one-to-many barter system where information is gathered from neighborhood hubs. Each neighborhood only needs one computer connected to other computers in nearby neighborhoods to assess needs and available resources in the region. Matches connect local demand with local supply and people are informed through nearly ubiquitous cell phone messaging. Government and NGOs step in only where a broader region is lacking in a specific skill or resource. Communities rebuild primarily with their own resources and secondarily with government and NGO funds. This minimizes redundancy and offers greater hope that the same limited funds might fulfill initial promise.

There are obstacles to this system. Not everyone is equally skilled and not all skills carry the same economic value. In an everyone’s time is equally valued model, time can be exchanged at par value. In a skilled labor is more valuable model, normalizing factors can restore parity. Not everyone will perform their task well. Community feedback can adjust exchange rates and provide a performance incentive. Microfinance and micropayments can help align self-interest with collective benefit. Not everyone has something to offer. Vocational training and a clear division of tasks can bring many up to speed. Skills and resources might be concentrated in certain geographies. Logistics and transportation would be considered in the pool of collective needs/resources.

These organized collaborations extend the altruism that survivors initially
feel. By working together, people get to know their neighbors. They participate directly in reconstruction rather than waiting for some entitlement. People feel better about their communities. Finally, emotional resilience increases as people realize they can rely on each other in future disasters.

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