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Doughnut Economics: Why We Have to Think Beyond Economic Growth

GDP Graph
Figure. SEQ \* ARABIC 1: GDP encourages endless growth.

If you were to ask an economist about the most important measure for how a country is doing, they would likely tell you to look at the country’s GDP. GDP, or growth domestic product, measures all the goods and services produced in a country’s borders for the year. For example, in 2019, the US GDP was estimated to be $21.43 trillion. For China, that number was $14.28 trillion in the same year, and for Iran, $454 billion. Every country produces some amount in a year, and GDP is meant to summarize all that is produced, from small business sales to corporate profits. The problem with GDP is it does not say how well the people in the country are doing. A country may have a very high GDP but be doing a great deal of damage to the environment and have a poor healthcare system. For this reason, among others, some economists are calling for a new way to measure how well a country is doing, one that considers the lifestyles and challenges faced by its citizenry.

In her book Doughnut Economics, Kate Raworth proposes that we should be rating a country not only on how well its people are doing but also on how well its environment is doing. Most of the problems associated with GDP stem from how we use it to measure progress. If a country’s GDP is increasing year after year, it is doing well. However, the Earth does not have unlimited resources for this seemingly endless growth. We cannot continue to produce more consumer goods once the raw materials have run out, and if climate change persists at the rate that it is, we will not have a livable planet on which to use our consumer goods. This is where the Doughnut Model comes into play. Raworth proposes that we use the doughnut to determine how well a country is doing, not economically, but rather socially and environmentally.

Classic Doughnut ChartThe doughnut model in Figure 2 shows three rings: one in the center where the social needs of a country are not being met; one on the outside where a country is exceeding its ecological capabilities; and one in the middle where a country is both socially secure and ecologically conscious. This “sweet spot” is the doughnut and should be the goal for every country to be in. It is a place where everyone would have consistent access to healthcare, education, and housing, and the oceans and land would still be habitable long-term.

The inner ring has measures for 12 categories: water, food, health, education, income and work, peace and justice, political voice, social equity, gender equality, housing, networks, and energy. For a country to move beyond this ring, each of these must be met for every person in the country. It is easy to assume that only developing countries would have a problem escaping this inner ring, and they do, but developed countries like the US show shortfalls here too. Raworth’s doughnut requires gender equality in all levels of government, meaning an equal or near equal number of men and women serving as political leaders. According to the Brookings Institute, there are three men for every one woman in Congress. Because of this and numbers like these the US would remain in the inner ring even though it has met the energy, water, and food recommendations. Gender equality is a necessary factor to include for the same reason our country was founded in the first place: there ought to be representation in government for all taxpaying citizens. If women are not represented equally, their needs, including childcare and healthcare may not be met. Compared to other developed countries like the UK and Canada, the US has significantly higher rates of maternal mortality, and these rates only increase for black women in America. Although the US has the highest GDP in the world, it is significantly lagging in healthcare expectations for women.

Ocean Acidification Diagram
Figure 3: CO2 is absorbed by the oceans, warming them and raising the pH levels

The outer ring is mainly a problem faced by developed nations. It accounts for 9 categories related to the environment: climate change, ocean acidification, chemical pollution, nitrogen and phosphorus loading, freshwater withdrawals, land conversion, biodiversity loss, air pollution, and ozone layer depletion. Each of these categories is intertwined and related, so excess in one will cause excess in another. If the ozone continues to be depleted due to chemical pollution, climate change will continue to spiral. If natural land continues to be converted for human use, we could see increased biodiversity loss as ecosystems collapse. Perhaps the most pressing is ocean acidification. The pH level of the world’s oceans has historically been basic, or alkaline, and measured at 8.1. However, seawater is excellent at absorbing CO2 emissions from the atmosphere, and these emissions lower the pH level, making the oceans more acidic. This can be consequential for marine life. While algae and seaweed benefit from increased CO2 levels, fish, oysters, and other sea life are harmed. The National Oceanic and Atmospheric Administration estimates that by the end of the century the ocean’s surface pH will be around 7.8. The last time the ocean was this acidic, a mass extinction event was occurring globally. CO2 also raises the temperature of the oceans, causing more glaciers to melt at the poles, which can have significant consequences for available drinking water.

The US may have a high GDP, but we also contribute 15% of the world’s CO2 emissions. This is due to a combination of industrial activity and fossil fuel combustion for energy. Continued growth and output will only increase CO2 emissions. There are many things the consumer can do to combat this increase, from buying locally grown produce to driving less; however, this is unlikely to have a significant impact on total emissions. Industries that produce oil, gas, and cement produce more methane than the consumer could ever hope to account for in their daily lives. The task of regulating the CO2 emitted by these companies falls on government and the industry itself. This could mean producing less, which affects many other industries and could result in a lower GDP for the country. But, as we have established, having a high GDP means nothing when it comes to how well the people of a country are doing, so lowering it would not reduce our nation’s wellbeing. If we could find a way to reduce CO2 emissions and continue to produce the things we need consume for our lifestyles, there is no reason why we should have to compromise that in the name of GDP. It is okay if the cost of production increases if it means we have a healthier planet to give to our children and grandchildren.

The consequences for focusing more on how a nation is doing instead of how it is performing on the global market are more far reaching than could be mentioned here. This is just a foundation from which we could design a more equitable and ecologically friendly society that benefits all of us. Using the doughnut model to guide future governing and production methods will involve changing the goals we have and what we do to achieve those goals. Creating a better functioning and happier society is possible, we just must be willing to make a change.

In the wake of the COVID-19 pandemic, some cities are already starting to implement the doughnut. Amsterdam began an initiative to create a circular economy, in which consumers and business owners reduce, reuse, and recycle as much consumer goods, building materials, and food as possible. The city has begun to design new neighborhoods that produce zero emissions and prioritize housing and access to nature. The idea is not to create as many houses as possible, but rather to develop places to live without harming the local wildlife and ecosystems. Each new building is constructed with the idea that should it ever be taken down, the parts can be reused in another project, reducing waste, and removing the need to mine for more raw materials.

Beach Island
Figure 4: The city says the Beach Island development will prioritize balancing the needs of humans and nature.

When the city began to realize that many residents did not have access to computers, they started a recycling program to collect old and broken laptops and refurbish them to those in need. In another sector, the city government is pushing private fashion producers to use at least 20% recycled materials in new garments, especially in denim, a textile that mixes materials and treatments to create jeans. The city has begun to organize a service where people can get their old jeans repaired instead of throwing them away and buying new ones. It is this type of support from the city government that is enticing private firms to become more sustainable.

While Amsterdam and cities like it have the social foundation and wealth to turn their attention toward sustainability, other, lower- and middle-income cities and countries would likely focus more on reaching the doughnut’s social foundation first. To implement the doughnut, the goal would not be to be better than other communities, but rather to create a better environment for a community. For this to happen, the change would have to be citizen-led, and a post-pandemic world where re-building and returning to normalcy is a priority is the perfect place to begin.

References

100 years on, politics is where the U.S. lags the most on gender equality. (2020, June 24). Brookings. https://www.brookings.edu/essay/100-years-on-politics-is-where-the-u-s-lags-most-on-gender-equality/

Amsterdam signs landmark sustainable ‘Denim Deal’ | I amsterdam. (n.d.). Retrieved April 22, 2021, from https://www.iamsterdam.com:443/en/business/news-and-insights/news/2020/amsterdam-signs-landmark-sustainable-denim-deal

Controlling Industrial Greenhouse Gas Emissions. (2020, August 20). Center for Climate and Energy Solutions. https://www.c2es.org/content/regulating-industrial-sector-carbon-emissions/

Could Amsterdam’s New Economic Theory Replace Capitalism? | Time. (n.d.). Retrieved March 21, 2021, from https://time.com/5930093/amsterdam-doughnut-economics/

Doughnut | Kate Raworth. (2013, April 28). https://www.kateraworth.com/doughnut/

GDP (current US$) | Data. (n.d.). Retrieved April 17, 2021, from https://data.worldbank.org/indicator/NY.GDP.MKTP.CD

Maital, S. (n.d.). Gross Domestic Problem. 17.

NVSS – Maternal Mortality—Homepage. (2020, November 9). https://www.cdc.gov/nchs/maternal-mortality/index.htm

Ocean acidification | National Oceanic and Atmospheric Administration. (n.d.). Retrieved April 17, 2021, from https://www.noaa.gov/education/resource-collections/ocean-coasts/ocean-acidification

The 35 Easiest Ways to Reduce Your Carbon Footprint. (2018, December 27). State of the Planet. https://news.climate.columbia.edu/2018/12/27/35-ways-reduce-carbon-footprint/

US EPA, O. (2016, January 12). Global Greenhouse Gas Emissions Data [Overviews and Factsheets]. US EPA. https://www.epa.gov/ghgemissions/global-greenhouse-gas-emissions-data

US Ranks Worst in Maternal Care, Mortality Compared With 10 Other Developed Nations. (n.d.). AJMC. Retrieved April 17, 2021, from https://www.ajmc.com/view/us-ranks-worst-in-maternal-care-mortality-compared-with-10-other-developed-nations