text: Understanding an Operational Environment
  In every country there is a balance between formal and informal economies. In successful states, the
  informal economy may be relatively small. However, in failing states the informal economy may form the
  majority of all economic activities. The local population may depend on informal markets for their most
  basic needs. It is difficult but important for counterinsurgents to develop an understanding of these informal
  economies (both legitimate and illegitimate.) Because they are outside host-nation government oversight,
  insurgents can exploit even legitimate formal economies as a source of funding. The black market, on the
  other hand, will most likely be a direct enabler of an insurgency in terms of both funding and logistics.
  2-28. The counterinsurgent must consider other informal economies. Most people work, buy, and sell in
  this economy, operating outside legal frameworks but not engaging in illicit or criminal activity (except
  perhaps for taxation issues). Sensitivity to the rules of an informal economy is one piece of cultural
  sensitivity to the population and the host nation in general. Examples of the rules of an informal economy
  include the following:
  * People earn income in non-cash payments such as benefits or goods.
  * People often use land for decades (or more) through traditional usage rights granted by village
  heads and chiefs with no legal title.
  * People may work without pay (in arrangements such as the traditional divisions of household
  and farm labor).
  2-29. Economic variables also tie into other elements of a society. For example, ownership or control of
  land and debt indicate something about the power structure within a society. Many developing societies
  have highly concentrated ownership of land, which can serve as a driver for social conflict and discontent.
  Whoever owns land or controls land has the power to use it for economic profit. Maintaining this
  ownership or control during an insurgency indicates a degree of power in a society. The same is true of
  debt. The ability to collect a debt indicates a degree of power in a society. Land and debt are examples of
  how economic factors link into other social factors.
  2-30. If a population views economic conditions as unjust, a lack of economic opportunity can be a root
  cause of an insurgency. (See paragraphs 4-14 through 4-22 for more information on motives for an
  insurgency.) As part of developing an understanding of an operational environment, counterinsurgents
  assess the current economic variables, the economic opportunities available to different segments of the
  population, and the effect insurgent and counterinsurgent operations are having on the population’s ability
  to meet their most basic economic needs. Economic survival, especially in an area where an insurgency is
  occurring, is almost as important and as immediate a challenge for households as physical security. For this
  reason, leaders at all levels of the counterinsurgency operation (including platoons and companies) need to
  assess the impacts of military operations on the following simple elements of the economic welfare of
  households and communities:
  * Income (including the capacity to earn streams of income in future).
  * Assets and property (used to earn income).
  * Work (including traditional patterns of unpaid work).
  2-31. Commanders strive to understand the economic impact of the unit’s presence in an area. For better or
  worse, the presence of an Army or Marine Corps unit affects normal economic incentives and disincentives
  for individual behavior. Introducing foreign wealth can have unintended negative consequences. For this
  reason, careful thought and planning are needed for a project intended to have local economic impact.
  Commanders anticipate the economic impact of their arrival and their continued presence in the area of
  operations. Additionally, commanders and staffs carefully weigh the costs and benefits associated with all
  economic activity. Some factors to consider are—
  * Prospects of long-term sustainability.
  * Possibility of local price inflation.
  * Disrupting natural incentives (such as farmers leaving fields to work on trash pickup projects).
  SOCIAL
  2-32. The social variable describes the cultural, religious, and ethnic makeup within an operational
  environment and the beliefs, values, customs, and behaviors of society. Understanding the society is