Introducing Doughnut Economics and the need for structural change

What is your reaction when you hear the word “doughnut”? Probably “Yum,” right? Along with that starch and sugar, even its roundness is satisfying. What about the term “Doughnut Economics”? Suddenly it doesn’t sound so tasty, but as a guide to re-evaluating society in a way that cares for both people and the planet, it is far more gratifying. Let’s look at how it works.

Economics is about more than just growth

Economics is the study of the allocation of resources, and the production, distribution and consumption of goods and services, as well as social welfare and production growth over time. Conventionally, people tend to focus on economic growth when looking at economic indexes and tend to neglect the importance of resource allocation and the distribution of goods and services. This is where doughnut economics comes in.

Doughnut Economics – when two circles make a whole

Doughnut economics is a framework for sustainable development that gauges the performance of an economy not by growth, but by the extent to which it meets the needs of humankind without causing environmental damage. Such destruction is indicated by an overshooting of the doughnut’s outer rim, which represents the Earth’s ecological ceiling. The inner circumference represents the foundation of society. Undershooting in this area indicates a failure to meet the essential needs of the people. The space between these two circles – the doughnut itself – is the ideal range for meeting both social and environmental needs. It is the sweet spot in which a regenerative and distributive economy is achieved and humanity can thrive.

What makes up the Social Foundation?

The Social Foundation that forms the doughnut’s inner ring is made up of internationally agreed minimum social standards that are related to the Sustainable Development Goals (SDGs). There are 12 of them:

• Food security
• Health
• Education
• Income and work
• Peace and justice
• Political voice
• Social equity
• Gender equality
• Housing
• Networks
• Energy
• Water

What is the Ecological Ceiling?

The Ecological Ceiling refers to boundaries to nine types of disturbance caused by humans, beyond which lie unacceptable environmental degradation and potential tipping points for the Earth.

• Climate change: greenhouse gasses, including carbon dioxide and methane, that are caused by human activities keep heat in the atmosphere and are one of the main causes of climate change.
• Ocean acidification: the carbon dioxide emitted by humans is absorbed into the oceans, which makes the water more acidic. It greatly affects marine life.
• Chemical pollution: toxic chemical matter released into nature causes biodiversity loss and low fertility in animals, including in us humans.
• Nitrogen and phosphorus loading: run-off from the overuse of fertiliser enters bodies of water, such as rivers, lakes, and oceans. It induces excess algae, which kills some underwater species.
• Freshwater withdrawals: overuse of freshwater could damage the ecosystem and cause water resources to dry up.
• Land conversion: converting land to use for economic activities, such as creating new farmland or building houses, can damage or erase wildlife habitat, disturb natural cycles, and reduce carbon sinks.
• Biodiversity loss: economic activities can lead to a reduction in the variety of species. It increases the vulnerability of ecosystems and reduces their ability to function.
• Air pollution: the emission of aerosols, such as particles caused by burning fossil fuels, has severe impact on the health of many species. It can also affect precipitation and cloud formation.
• Ozone layer depletion: greenhouse gasses emitted by our economic activities also harm the ozone layer. Since the ozone layer protects the Earth from radiation, its loss leads to health issues such as skin cancer.

Falling short, overshooting and the need for structural change

The doughnut graph of the current economy shows, in red, its shortfalls and overshoots. This jarring, non-round shape depicts an economy that is not designed for sustainability. Currently, all the social foundation indexes fall short and four planetary boundaries are overshooting – climate change, nitrogen and phosphorus loading, land conversion, and biodiversity loss. Structural change is needed in these areas.

Japan’s overshooting and its focus on agriculture

A doughnut graph of Japan’s economy may be more likely to show overshooting than shortfalls.

For the overshooting in climate change, there are actions we can take now to change our economic activities and slow climate change. See these articles: How does dairy food production affect climate change?, Meat alternatives to help reduce greenhouse gas emissions, How to cut your GHG emissions to avoid climate catastrophe.

Nitrogen and phosphorus loading is led by waste water from households, industry and agriculture. But the excessive use of agricultural fertilizers that contain phosphorus and nitrogen are the big contributor of the chemicals’ presence in bodies of water. Excessive use of fertilizer aims to produce more in a shorter period of time, and that is motivated by mass production and market competition in a capitalistic system, i.e., the goal of unabated economic growth.

Biodiversity loss is also strongly related to agriculture. According to the UN-related body IPBES, farmed animals account for more than 90% of all large land animals, and “the demand for grain-fed meat is one of the main drivers of global biodiversity loss.”

The aim is for us to thrive, not the economy

Kate Raworth, the creator of Doughnut Economics, has a great presentation about it on TED Talks. She emphasizes how in nature everything grows and thrives, but that to do that, regeneration and redistribution are needed. Her thinking is that if we change our current economic system to include that, and end its emphasis on constant, one-directional growth, then we too will thrive.