“Doughnut Economics”: A Sustainable Economic Model

By Hebe Larkin

Throughout the 20th century, economic growth was the ultimate goal of all financial markets. For companies, growth meant profit. For people, the availability of more things, the push of a competitive market to innovate, and a rise in wages as a result of this competition inevitably lead to an increase in living standards. In the 1950s, capitalist America became aspirational, and economic growth was viewed as a means of increasing quality of life. Nowadays, major corporations (with some of the world’s largest polluters among them) seize on this argument to counteract a push for Corporate Social Responsibility (CSR) policies. Redirecting money to protect the environment is incompatible with social justice, they argue; for it reroutes money which will trickle down directed to the poor for environmental protection. Growth is the only model under which social justice is achievable.
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But growth is inherently unsustainable. It requires the use of resources at an ever-increasing rate; but our current rate of consumption is already unsustainable. Furthermore, with the global ‘middle class’ expected to grow from 2bn consumers in 2012 to nearly 5bn by 2030, resource use is only going to increase – and accelerate. So there is a problem, it seems, at the heart of our socio-economic system: we cannot have a socially just world, if we have an environmentally sustainable one, and vice versa.
 
Yet Oxford economist Kate Raworth has posited a solution to this, requiring a complete re-conception of our current economic model: she calls it ‘Doughnut Economics’. First introduced in a report she authored for Oxfam in 2012, and later the subject of her 2017 book Doughnut Economics, Raworth’s model provides a framework for an economic system under which the world is both socially just, and environmentally sustainable. So exactly how does it work?
 
The model is reasonably simple, consisting of the ‘social justice line’ – the lower limits below which, a society that is socially just, cannot fall– and ‘planetary boundaries’ –the limits beyond which we endanger the earth’s ecosystem.
 
The ‘Social Justice Line’ is comprised of the following categories as follows:
 

1. Food security
2. Adequate income
3. Clean water & good sanitation
4. Effective healthcare, access to education
5. Decent work
6. Modern energy services
7. Resilience to shocks
8. Gender equality
9. Social equality
10. A voice in democratic politics

 
The ‘Planetary Boundaries’ are the following (N.B. as it stands we have already exceeded the first four boundaries and are dangerously close to reaching many others):
 

1. Climate change
2. Biodiversity loss
3. Nitrogen & phosphate use
4. Changes in land use
5. Ozone depletion
6. Ocean acidification
7. Freshwater use
8. Particles in the atmosphere
9. Chemical pollution

 
But how can this model be viable, if it is at odds with received opinion? The fact of the matter is, it’s not the needs of the poor that is putting strain on the planet: it is the demands of the rich. 
 
As the Oxfam report states: providing the additional calories needed by the 13% of the world’s population that currently face food insecurity and facing hunger would require just 1% of current global food supply; bringing electricity to the 19% of the world’s population who currently lack it is achievable with less than a 1% increase in global CO2 emissions; ending poverty for the 21% of the world’s population who live on less than $1.25 a day would require just 0.2% of global income. 
 
By contrast, a mere 11% of the global population generate around 50% of global carbon emissions; the richest 10% of people hold 57% of global income, the poorest 20% just 2%; high-income countries, home to 16% of the world’s population, account for 64% of world’s spending on consumer products and use 57% of the world’s electricity. 
 
So achieving social equality requires little increase in resource use – it instead requires a redistribution of existing resources and a balancing of consumption. Indeed, environmental stress can exacerbate poverty (by limiting people’s access to food security, health, safe water & sanitation, among other things), and vice versa (by forcing people to use resources in inefficient ways to meet their needs) - so it is not as simple a dichotomy as it may be made out to be.
 
What is required, then, is a series of policies enacted with serious consideration of both sides of the coin, that take into account social and environmental factors. Policies which purely focus on one of these factors risk endangering the other. For example, subsidising fertilisers to increase food production and reduce prices can often encourage farmers to use excessive amounts of fertiliser. This brings marginal improvements in crop yields and simultaneously harms the environment when nitrogen makes its way into the water system. 
 
A more effective means of approaching this issue would be to tackle food waste, reducing the demand for an increase in crop yield – for on average, 1.3bn tonnes of food (1/3 of the world’s food supply) is wasted each year. This is achievable by improving harvest techniques, storage facilities and processing in developing countries, and increases farmer’s incomes while reducing land, water, fertiliser use and carbon emissions.

So we shouldn’t cling to growth as the financial model. Raworth’s doughnut provides an economically viable, socially just and environmentally friendly means of rethinking approaching our current economic system.