Can Amsterdam's Economics Experiment Provide The Blueprint For A More Humane And Sustainable Future?

Inequality, health care, environmental sustainability…. These are all issues that we know are of the utmost importance, and yet, too often are dismissed in the name of economic growth. One of the few bright spots of the pandemic has been that it has forced us to reconcile with the inability of capitalism to address some of these most basic human and environmental needs. 

But, what if there was a way to deal with these urgent problems, while also ensuring that we all have the financial means to live a high quality of life? The answer may lie in Doughnut Economics.

What is Doughnut Economics?

Doughnut Economics was created by economist Kate Raworth in 2012 as a visual framework for sustainable development. It combines the concepts of planetary and social boundaries in a circular diagram. The center, or “doughnut hole,” shows the proportion of people that lack access to essentials such as healthcare, equity, and education, while the crust represents the ecological boundaries necessary for a sustainable future. 

Generally, people in wealthier countries are living above the environmental ceiling, while those in poorer countries fall below the social foundation. The goal is to get everyone into the space between.

The first step towards a Doughnut Economy is for businesses and governments to determine what benchmarks would bring them inside the doughnut. For example, emission limits, accessible healthcare, or affordable living options could all be pathways to get to that sweet spot in the center. 

Raworth argues that the goal of getting “into the doughnut” should replace governments’ and economists’ endless pursuit of GDP growth. She points out that “growth” in terms of GDP is often powered by limited natural resources that ultimately will push the earth to its limits. By aiming for the “doughnut hole” we are able to find a balance between meeting human’s immediate needs and protecting our future.

 What does Doughnut Theory look like in practice?

Until very recently, this new way of looking at the economy was just a theory. However, in April of 2020,  when the first wave of COVID hit, Amsterdam’s city government announced it would recover from the crisis, and avoid future ones, by committing to Doughnut Economics. 

Amsterdam’s goal is to bring all of its 872,000 residents inside the doughnut, ensuring that they each have access to a good quality of life, without putting more pressure on the planet than is sustainable. 

There are several key shifts that have happened in Amsterdam since April to bring the city closer to this goal.

True-Price Initiatives: Stores in Amsterdam have put minimal increases on the price of purchases, with explanations of where the money is going. For example, a zucchini comes with the label: 6¢ extra per kilo for their carbon footprint, 5¢ for the toll the farming takes on the land, and 4¢ to fairly pay workers.

Beach Island: The most ambitious plan to date, Beach Island is a construction project designed to produce zero emissions and to prioritize social housing and access to nature. It was built by using reclaimed sand carried by boats run on low-emission fuel and with foundations that provide protection against future rises in sea-level. 

Computer Refurbish: The social distancing measures of the pandemic created a huge demand for laptops. Rather than buy expensive new devices that would eventually contribute to the rising problem of e-waste, the city collected 3,500 old and broken laptops and had them refurbished and distributed to community members in need.

Building sustainability standards: The city has introduced a number of initiatives to ensure sustainable building practices, including requiring a “materials passport” so that whenever buildings are taken down, the city can reuse the parts.

Fashion Industry: In the past, Amsterdam was proud of having the highest concentration of denim brands in the world. However, since denim is one of the most resource-intensive fabrics available, they knew that change was necessary. In October, the denim industry agreed to work together to produce 3 billion garments that include 20% recycled materials by 2023. The city aims to organize collections of old denim and create repair shops where people can get their jeans fixed instead of throwing them away.

What are the critiques of Doughnut Economics?

While Doughnut Economics seems to offer an exciting new alternative to capitalism, not everyone is a believer. Some critics point out that the idealistic nature of Doughnut Economics ignores humans’ desire to prioritize wealth and compare themselves to their neighbors. Others argue that Doughnut Economics is a left-wing ideology that discourages businesses and growth.

But, despite its critics, Doughnut Economics continues to be providing a framework for cities around the world. Copenhagen in Denmark, Dunedin in New Zealand, Nanaimo in Canada, and Portland in the United States are all following Amsterdam’s lead. Citizen-led groups focused on the doughnut are also forming in places including São Paulo, Berlin, Kuala Lumpur, and California.

The next few months and years are likely to see many other cities adapt Doughnut Economics as they reimagine their post-Covid communities. Van Doorninck, the deputy mayor of Amsterdam, hopes that her city can provide the positive example the rest of the world needs to try out Doughnut Economics.

“If you start something and you can make it visible, and prove that you or your neighborhood is benefiting, then your city will wake up and say we need to support them.” she said.

Amsterdam is providing an example of Doughnut Economics that has the potential to inspire many more communities to wake up to a more humane and sustainable future.