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Doughnut Economics, Seven Ways to Think Like a 21st Century Economist

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When one first meet the expression Doughnut Economics, he may think of a joke, or perhaps an economic model for managing the supply or the purchase of food. It is not the case! The Doughnut Economic Model proposed by Kate Raworth is a very deep, at the same time philosophic and pragmatic, approach towards the matter of sustainable economy. Thinking that there are 2 lines, 2 limits, 2 boundaries, that, when overpassed, could trigger a serious of nefarious things for human development is very valuable and of practical use for citizens, academics, firms and institutions. Kate Raworth, in her book Doughnut Economics, Seven Ways to Think Like a 21st Century Economis, explains clearly the basics for sustainable development

 
 
What is Doughnut Economics
 
“Achieving human development without damaging the Earthsystem.” This is the main purpose of Kate Raworth’s Doughnut Economics model. According to this model, there are two boundaries: the inner social boundary and the outer environmental boundary. Between these two lies an area – shaped like a “doughnut” – which represents an environmentally safe and socially just space for humanity to thrive in. It is the space in which inclusive and sustainable economic development takes place.
 
1) The inner boundary (the social foundation): According to Kate, a stable society should ensure that all people have the resources needed (food, water, health care, and energy) to fulfil their human rights. This social foundation forms an inner boundary, below which are many dimensions of human deprivation.
2) The outer boundary (The environmental seiling): humanity’s use of natural resources must not stress critical Earthsystem processes (by causing climate change or biodiversity loss, for example) to the point that Earth is pushed out of the stable state. The environmental ceiling forms an outer boundary, beyond which are many dimensions of environmental degradation.
 
Kate has identified 11 dimensions for social foundation (based on governments’ priorities for Rio+20) and 9 dimensions for planetary boundary set out by Rockström et al (2009b).
 
 
Figure: Doughnut Economy – the safe and just space for humanity
The 11 dimensions of the social foundation are illustrative and are based on governments’ priorities for Rio+20. The nine dimensions of the environmental ceiling are based on the planetary boundaries set out by Rockström et al (2009b).
Source: Kate Raworth (2016)
 
 
Are we living within the Doughnut?
 
First attempts to quantify the social and planetary boundaries show that humanity is far from living within the Doughnut.
 
According to the Global Footprint Network, the Ecological Footprint (the ecological resources we uses to satisfy our needs) is much higher than Biocapacity (the resources Earth can provide in a year, without depleting the stock of resources). The result? Now we should live in a planet as big as 1 and half planets Earth. Instead, we are drawing from Earth stock resources to satisfy our needs. And if we lived as people who live in the United States, 5 planets would be needed. More in detail, the environmental ceiling has already been crossed for at least three of the nine dimensions: climate change, nitrogen use, and biodiversity loss.
 
According to the World Bank, still 11% of global population (that is about 800m people) are undernourished and in some developing countries (e.g., Central African Republic, Haiti, Korea DR, Namibia, etc…) this ratio almost reaches or even goes over 50%; and 11% of the global population live on less than $1.9 a day as well. About 30% of global population have no access to improved sanitation facilities.
 
 
Figure: The Ecological Footprint: How many planets do we need if we lived as……
Source: LTEconomy elaboration on Global Footprint Network data, 2017 National Footprint Accounts
 
 
Is life within the doughnut possible?
 
The challenge of moving into the doughnut space is complex because social and planetary boundaries are interdependent. Environmental stress can exacerbate poverty, and vice versa. Policies aimed at moving back within planetary boundaries can, if poorly designed, push people further below the social foundation, and vice versa.
 
But well-designed policies can promote both poverty eradication and environmental sustainability – bringing humanity into the doughnut from both sides.
 
There are 5 key factors to work on:
 
1) Population: of course, more people we are on Earth more resources we need. Fortunately since 1971 the population growth rate has plummeted. The key factor in stabilizing the number of people is “ensuring a life without deprivation,” above the social boundary.
2) Distribution: a fairer and more efficient use of global resources is needed so as to live within the doughnuts boundaries. Wealth and income inequality is a big problem. Now, 45% of CO2 global emissions are caused by just the 10% biggest emitters. 13% of global population is undernourished. Providing the additional calories needed by them would require just 3% of the current global food supply. Let’s consider that at least 30% of the world food supply is lost just after harvesting.
3) Aspiration: living in urban context amplifies the effects of mass behavior and promotion on our desires and needs. The less the aspiration to material needs, the less our pressure on planet Earth.
4) Urbanization: by 2050 70% of global population will live in urban areas. Urban cities can also offer an opportunity of satisfying people’s needs more efficiently. How? The choice of technologies for building, transportation, energy will play a big role. CO2 emissions could be reduced, the use of resources and waste could be reduced, only if the appropriate technologies are used.
5) Governance: strong local, national and global governance is required to face more systematically and with a long-term view in mind the impelling challenges.
 
According to Kate, moving from GDP to Doughnut is essential for overpassing the challenges of the 21st century. GDP is ephemeral, incomplete and shallow. It is not suitable for running and take care of our Planet Earth!
 
 
Three essential things we should know about social and planetary boundaries
 
There are important characteristics that these two concepts have in common:
 
a) Social and planetary boundaries are interdependent: crossing over either of these boundaries can trigger both social and ecological crises. Sustainable development can only succeed if poverty eradication and environmental sustainability are pursued together.
b) Boundaries are based on norms: Both the social foundation and the environmental ceiling are essentially normative boundaries. What constitutes human deprivation is determined through widely agreed social norms. Likewise, the boundaries of natural resource are based on perceptions of risk, and of the desirability of staying within the Holocene.
c) Global to local: Both the local and the global matter for staying within planetary and social boundaries. For example, deforestation within a country can be a tipping point towards localised flash flooding and soil degradation, long before it affects land-use change at the Earth-system scale.
 
 
Conclusions
 
Kate Raworth’s book makes clear with a simple and clear image what are the interconnections between economic, social and environmental wellbeing. These three cannot be achieved alone. They must be pursuit altogether. There are lots of indexes (primary the Ecological Footprint ad the Human development index) which allow us to measure and monitor the level of ecological and social development (i.e., Sustainable development).
 
Being within the “Doughnut” must be a must! In that prospect, it can be extremely helpful moving (we all, citizens, firms, institutions) from a short term vision (maximization of short term profits, benefits and results) to a long term view: towards the Long Term Economy model.

 

Read more on Long Term economy, the unique model able to create a real sustainable economy.

 

 
 
Dario Ruggiero,
LTEconomy, 04th May 2017
   
 
Sources
 
Kate Raworth website - https://www.kateraworth.com/
 
Kate Raworth, (2017), Doughnut Economy, Seven ways to think like a 21st-century economist

 

 

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