“Doughnut economics is a new stream of economics emerging to ensure the sustainability and green growth of the economy by setting up layers like ecological ceilings and social foundations.”
Introduction
Doughnut economics was a model first introduced by Kate Roworth in 2012. This model outlines the existence of different types of economies with different needs and requirements restricting it to be supported with social foundation and ecological preview. Considering the growing income and resource needs, people are pressuring Mother Earth for more resources, thus, making it unsustainable. Moreover, the importance and effect of the doughnut economy can be understood with the example of Amsterdam, the capital city of the Netherlands.
In her book, “A Safe and Just Space for Humanity”, Kate Roworth introduced doughnut economics for the very first time. Doughnut economics provides a way of thinking about the globally prevailing, growth-focused economic system against the backdrop of limited availability of natural resources and to imagine greater social equality. Apart from focusing on doughnut economics this book essentially covered seven ways an economist should think in the 21st century. The seven things include changing the goal; raising questions about what the economy contributes to in the bigger picture; nurturing human nature instead of the self-interested, isolated, calculating rational economic man; getting savvy with systems; designing to distribute instead of the debunked ‘growth will produce equality’, and being agnostic about growth, i.e. not having economic growth irrespective of whether people thrive, but prioritizing thriving people irrespective of economic growth.
Is there any need to change classical means?
The human foundation is based on the classical economic theory of Gross Domestic Product, which is globally accepted as a growth indicator. GDP considers the economy as a conglomerate of businesses, units, and banks and gives their economic efficiency in terms of the monetary value of their services. But GDP does not take into account the importance of natural resources, pressure on the resources, and other factors affecting sustainability. This is what is included in Doughnut Economics. The doughnut economy focuses on setting up a doughnut-shaped economy structure whose outer layer will be the ecological ceiling and the inner layer will be of social foundation. The difference between both layers is the area where growth meets sustainability.
How do doughnut economies work?
Measuring and calculating this safe space is done with several indicators. There are 12 dimensions of social foundation like food, water, health, etc., and 9 dimensions of the ecological ceiling like climate change, ozone layer depletion, etc. The extent of adoption and adaptability of doughnut economics depend on its use – national, regional, or local level. According to a doughnut calculating model drawn up by a team at Leeds University 9, current calculations for more than 150 nations show that in many places the basic requirements of billions of people are not being satisfied and that, at the same time, the planet’s sustainable boundaries are being exceeded.
Is it really helpful?
Apart from aligning with 17 SDGs goals and minimal waste generation, it also ensures green or sustainable growth for countries. Adopting such a system will result in judicial use of resources and will ensure optimum usage. But is it enough? Is Doughnut economics really helpful? The answer is a little ambiguous. Many economists question the approach used to define the ecological ceiling and many question the social foundation. Moreover, doughnut economics do not ensure the eradication of poverty since without the growth of GDP, eradication of poverty will be difficult. It also creates a conflict of interest between national and personal interests since people will be forced to work in a just space and use the resources to the extent required. Apart from this, it has measurement issues of different aspects like greener resources, environment-friendly, etc., and faces issues of implementation since it requires restructuring of the whole economy when applied at the macro level.
Role of businesses and government in Doughnut economics:
Governments play a very important role in the implementation of Doughnut economics. Their policy, rules and regulations, taxation, and penalties will define the scope and spread of doughnut economics all over the country.
Apart from the government, businesses also play an important role in the successful functioning of the doughnut economy. Business policies to adapt to sustainable resources and focus on environmental means will be a prerequisite for it. Moreover, other factors like social
inclusion, sustainable entrepreneurial ideas, and fulfilling social responsibility are some roles
that businesses need to play for the success of doughnut economies.
Amsterdam: Very first doughnut-oriented city
Among the first cities to embrace the ideas of Doughnut Economics was Amsterdam. A Doughnut Coalition was established by passionate people and organizations who wished to operate by the Doughnut principles after the then-alderwomen for sustainability proclaimed Amsterdam a Doughnut City in 2020. Not surprisingly, the story of the Amsterdam Doughnut made headlines around the world, including Time Magazine, The Guardian, etc Ever since then, delegations have been visiting Amsterdam to observe how the city manages the Doughnut. Amsterdam used doughnuts as an effective means to get out of COVID-19 in 2020 and to promote their social and economic recovery. It’s an inspirational and motivational approach to use doughnut economics which was just an idea to transformative action to implement Doughnut thinking into policy making and amendments. Thus, Amsterdam set itself up as a role model for other countries to follow in their footsteps and implement doughnut economics to ensure sustainable growth.
How can India benefit from it?
Doughnut economics when applied to India can prove to be beneficial in terms of sustainability and India’s objective to fulfil SDG Goals. If the doughnut economy is applied, it will help to raise people above social standards by providing them with basic amenities like health, etc. Since India is facing major problems like energy requirements, high carbon footprint, etc., the doughnut economy can prove to be a blessing in disguise. By emphasizing policies that advance social justice, gender equality, and fair salaries, we can reduce economic disparity. By applying the concepts of Doughnut Economics to the formulation of public policy at all governmental levels India can make changes in the current policies and develop new ones to achieve the objectives of ecological sustainability and social well-being. Moreover, taking part in international cooperation to tackle global concerns, and understanding that problems such as resource depletion and climate change necessitate group actions. India may both benefit from and contribute to the global Doughnut Economics movement.
Conclusion:
To conclude, Doughnut economics is a new stream of economics emerging to ensure the sustainability and green growth of the economy by setting up layers like ecological ceilings and social foundations. Though doughnut economics is still a pen-paper solution, it still has lots of potential which can be witnessed through examples like Amsterdam. Criticism may revolve around its inefficiency in combating poverty or conflicting interests of people but still in today’s global scenario doughnut economies are very relevant and useful to sustain resources for our future generation. Additionally, the government and businesses will play an important role in moulding the needs and preferences of consumers according to the doughnut economy.
Moreover, the Doughnut economy can play a substantial role in the growth of India. Implementation of it at the grassroots level can solve issues like water scarcity and resource allocation. The Indian Government should take into consideration the example of Amsterdam and other countries implementing a doughnut economy to ensure eco-friendly growth.
By:-Aadi Jain
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