According to the United Nations, the COVID-19 pandemic is likely to cost the world an alarming US$1 trillion this year and there is little evidence to the contrary. Lockdowns and various other policies currently being used across the globe to fight and curb the spread of the virus have directly resulted in near-total halt in the economic activities of most countries already. As if that weren’t enough, this pandemic has also ushered in recessions in a number of countries including Germany and Japan, and we are barely halfway through the year.
Like most other economies, Amsterdam, the well-loved capital of the Netherlands, has been severely affected by the pandemic. As a visitor’s paradise with over 20 million tourists per year, Amsterdam is expected to take a huge economic hit. There are projections that its economy will shrink by as much as 8% and unemployment is predicted to rise by 9% next year as COVID-19 brings the travel industry to a near standstill.
The inherent inequalities and inefficiencies of our existing economic systems have also been exposed during the crisis. So, as a means to sustainably rebuild after the pandemic, last month the Amsterdam City Council launched the The Amsterdam City Doughnut: A Tool for Transformative Action.
The doughnut being discussed here is an economic model devised by Kate Raworth, high-profile British economist and Senior Visiting Research Associate and lecturer at Oxford University’s Environmental Change Institute, whose work rose to prominence after publishing the book Doughnut Economics: Seven Ways to Think Like a 21st Century in 2012. Its name is derived from the visual representation of the model; comprising of two rings with a hole in the middle that looks strikingly similar to a classic, edible doughnut.
Now the first ring of this doughnut is the inner ring, and it serves as the social foundation which houses all the factors we need to consider to lead fulfilled lives. These include: food security, health, education, income and work (the latter is not limited to employment but also includes things such as housekeeping), peace and justice, political voice, social equity, gender equality, housing, networks, energy and water.
The twelve components of this foundation are derived from internationally agreed minimum social standards, as identified by the world’s governments in the Sustainable Development Goals in 2015. People who live in the ‘hole’ created by this ring, which is in the empty space in the middle of the donut, represent those who live in deprivation as a result of a shortfall of any of these resources.
For its part, the outermost ring of the doughnut represents the ecological ceiling and Earth’s environmental limits beyond which we should strive not to go. When we overshoot this ceiling, we inflict environmental crises upon ourselves as well as our planet because we all know how negatively issues such as climate change, ozone depletion, ocean acidification, pollution, and biodiversity loss has affected our daily lives.
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And where then is the sweet or safe spot of this doughnut according to this economic model? Well, we all know that the space between the two rings is the doughnut itself precisely because it is the meaty part of the snack. So it should come as no surprise for you to learn that this meaty part is the ideal space for humanity in this economic model. This is our safest spot because; here we can thrive easily while also meeting the needs of our planet.
The economic model currently being used by most governments and taught in most economics courses, is represented by a circular flow of money between individuals and institutions. The success of this is measured in net growth and GDP and this leaves out crucial factors such as the environment and social equality. There are cracks in this model; aside from the fact that this deeply extractive approach has wreaked havoc on our planet, most of the needs of people are still unmet, with billions still living with little food and water and the wealth inequality gap increasing.
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So in the simplest of terms, the doughnut economic model provides us with a way out. It helps us plan adequately on how best to provide for the needs of our societies while simultaneously maintaining our planet’s ecological wellbeing. Furthermore, with the doughnut economic model, this notion of growth and what matters is expanded to include factors that really matter to individuals and their wellbeing, such as social harmony and gender equality.
Building on last year’s programme, Amsterdam’s authorities presented the Amsterdam Circular Economy 2020-2025, taking the Doughnut model designed for global application and downscaling it into a tool for the transformation and sustainable rebuilding of its city post-COVID-19.
This was achieved through drawing up a “portrait of the city”, showing in practical terms where basic needs of its citizens are not being met, where “planetary boundaries” are overshot and how these issues are interlinked.
One social issue the circular economy plan is looking to address is housing needs, with 20% of city tenants unable to cover their basic needs after paying rent, and just 12% of approximately 60,000 online applicants for social housing being successful. With existing economic systems, the solution might be to build more homes. However, Amsterdam’s “portrait” shows that carbon dioxide emissions are already at high levels; 31% above 1990 levels, identifying that 62% of these emissions come from the importation of building materials, food and consumer products from outside the city boundaries.
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In response, the City’s Deputy Mayor Marieke Van Doorninck says the city plans to systemize sustainability for the city by creating regulations to ensure materials are recycled, recyclable and bio-based (such as wood). The doughnut model is not the solution, but rather, an entirely new way of looking at the economy so as to provide regenerative and sustainable solutions.
“When it comes to waste, we want to be 100 percent circular by 2025, which is very ambitious,” said Anne Helbig, Policy Officer, City of Groningen.
One of the biggest challenges of creating a more sustainable economy is changing the status quo. There is the question of “what replaces what we already have?”. With COVID-19 forcing governments and world leaders to consider how to rebuild their economies post-pandemic, the suitable answer may just be the “Doughnut Economic model”.
Kate Raworth explained this best when she relayed that, “when suddenly we have to care about climate, health, and jobs and housing and care and communities, is there a framework around that can help us with all of that? Yes there is, and it is ready to go.”
Amsterdam is the first city to implement the Doughnut Economic model in the world. And we sincerely hope that it’s not too long before many others will follow suit.
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Cover image Burak AYDIN/Pexels.