|Government leaders play a role in softening the economic impact of Covid-19 from business continuity plans to spending on healthcare. / Photo by: Lightspring via Shutterstock|
Government leaders play a role in softening the economic impact of Covid-19 from business continuity plans to spending on healthcare. City authorities in Amsterdam, Netherlands understood this well and their solution is to help the Dutch capital mend its post-pandemic economy with a doughnut. No, not the dessert food you imagine, but an economic model.
What is the doughnut economic model?
The doughnut economic model is a visual framework for sustainable development. Shaped like a lifebelt, it mixes the concept of social and planetary boundaries. The doughnut model explains that the goal of economic activity is about meeting the core needs but without harming the planet.
The inner ring represents the minimum that people need to lead a good life, ranging from food, health, education, income and work, peace and justice, political voice, social equity, gender equality, housing, networks, energy, and water. The center hole depicts the part that people lack access to, which means that anyone who is not attaining life’s essentials is living in the doughnut’s hole. The challenge is to get people out of that hole without overshooting the outer crust, which means having healthy oceans, a protective ozone layer, and a stable climate.
The idea was developed by Oxford University economist Kate Raworth in her Oxfam paper and was elaborated in her book Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist.
|The inner ring of the doughnut model represents the minimum that people need to lead a good life, ranging from food, health, education, etc. / Photo by: Efetova Anna via Shutterstock|
The Dutch capital and economic reforms
Municipality officials in Amsterdam believe that the doughnut economic model can help rebuild the city in a post-pandemic world, reports the British daily The Guardian.
The officials are set to adopt the said economic model and will be making history as the first city in the world to adopt such a measure. Amsterdam’s deputy mayor Marieke van Doorninck said, “It can help us overcome the effects of the crisis.” She added that although it may appear “strange” for them to be already thinking about the post-pandemic period, there is a need to do so “as a government.” The plan will help them not depend on easy mechanisms.
Raworth, who joined the Guardian interview with van Doorninck via Skype, also said that we have to suddenly care about health, the communities, housing and care, and climate altogether. If people are looking for a certain framework that can help them deal with all these things, there is an existing model and “it is ready to go,” the English economist said.
The premise is that the economic activity should be meeting the needs of people and society but within the means of the Earth. Raworth even scaled-down the doughnut model to provide the Dutch capital with a city portrait that will display how issues are interconnected. Even the city’s deputy mayor said that it is not just a “hippy way” of looking at the world. She cited the housing crisis in Amsterdam.
Housing needs in the city are not being satisfied to an increasing extent. Nearly 20% of the city tenants cannot cover their basic needs after they pay their rent and only 12% or about 60,000 people applying for social housing online receive approval. Social housing is affordable housing for people on low to moderate incomes who have a housing need. The solution to this would be building more homes. Statistics Netherlands published that existing home prices in Amsterdam increased by 6.23% in the first quarter of 2019 and 3.6% if based on inflation-adjusted change.
The carbon emission intensity of the economy
Carbon intensity is the emission rate of a pollutant relative to the intensity of a certain activity, such as industrial production.
The doughnut economic model further shows that carbon dioxide emissions in the city are already above 31% of the 1990 levels. Consumer products, food, and building materials importation contribute to about 62% of those emissions. This is why Amsterdam plans to regulate those imports to make sure that builders are using materials that are possibly bio-based and recycled. A good example of this kind of material would be wood.
However, the doughnut approach similarly encourages policymakers to look to the horizon. Just because houses in the capital are too expensive does not mean that there are too few being constructed. It involves capital flowing globally to find an investment. As a way of looking at the doughnut economic model, it would mean that Amsterdam will not continue with the same structures that they usually do after the coronavirus health crisis is over.
As a country, Netherlands CO2 intensity of economy measured in kilograms of CO2 per $ of GDP stood at 0.22kg in 2014 from 0.33kg in 1990. This is according to scientific online publication Our World in Data.
Van Doorninck also highlighted the city port that is the single largest importer of cocoa beans in the world. Most of these cocoa beans are from west Africa but labor is usually highly exploitative. She believes that the new economic model will give space to consider whether they want a city where products are produced through labor exploitation.
How Amsterdam includes labor rights in West Africa in their “city portrait” shows the value of the economic tool, opined Raworth. Both she and van Doorninck recognize the need for supranational authorities and the national government to agree with the action plan. Raworth shares that before the lockdown in Belgium, her last meeting was with the European Commission in Brussels and the governing body also expressed great interest.
Raworth added that the world is now experiencing a series of surprise impacts and shocks that are enabling countries to shift away from the concept of growth to thriving. She believes that it is the moment we need to connect planetary health and bodily health.
Compared to the neighboring countries, such as the UK, Belgium, Germany, and Denmark, the Netherlands has taken relatively mild measures against the spread of Covid-19 in the country. They have not imposed a hard lockdown but the decreasing daily numbers of new cases, deceased patients, and hospital intakes show that their measures may not necessarily mean less effective. The Dutch approach is more of having an “intelligent lockdown” and “group immunity.”
The doughnut economic model seems a holistic tool that will help not just Amsterdam but the Netherlands as a country to remake their future after the health crisis.