What is Doughnut Economics?

Doughnut Economics is a framework developed by Kate Raworth, a British economist. Doughnut Economics represents a framework designed to guarantee that communities possess the resilience necessary to meet the fundamental needs of individuals, allowing them to thrive without surpassing the ecological boundaries of the planet. The aim is to create an equitable, sustainable and safe living space for everyone by ensuring a balance.

The shape of a doughnut is simple. This simplicity enables ideas to clearly stick in minds. The hole at the center of the doughnut represents the area where the community falls behind in terms of basic needs.  Poverty, inaccessibility of health care, lack of education, insecure jobs, inequality, problems in accessing clean water, security vulnerability.  According to the metaphor of Raworth, falling in this hole means to go below the social base.

And the outer circle of the doughnut represents the ecological ceiling. In other words, the load bearing capacity of the planet: Soil utilization, freshwater reserves, biodiversity, ocean pollution are parts of this ceiling. A considerable number of these categories are examined within the context of the “limits of the planet”. Stockholm Resilience Centre is one of the key references of this framework.

Thus, Doughnut Economics considers both of these risks simultaneously. Social collapse on the one hand, and ecological collapse on the other. And the area of a doughnut is the area where a “good life” is possible. No more, no less, just the right balance. So why has this theoretical model, developed by Raworth in 2012, become an increasingly popular term today?

We are experiencing multiple crises at once. Climate crisis is expanding, life becomes more expensive in the cities, young people’s unemployment is a chronic problem in many countries, food prices fluctuate, energy supply becomes politicized. This scene conveys the notion that relying on a single indicator is insufficient. It is not sufficient to make an effort to increase income per person. The conditions under which the income is produced and how it affects people’s lives are also important.

Doughnut Economics, thus, provides a good tool for the ones to want to redefine the concept of welfare. It is also based on global references, such as Sustainable Development Goals, in terms of what social standards can be.

There are two limits at the heart of Doughnut Economics. One is focused on safeguarding people, while the other emphasizes the protection of the planet. Raworth asserts that the concept of a good life will always be lacking unless we consider these two aspects in conjunction. Otherwise, we can ignore people while trying to safeguard nature. Or, on the contrary, we can damage nature in an irreversible way while trying to improve welfare of people.

The social base represents the minimum life standards that are the right of every individual. Access to health care services, high-quality education, safe housing, clean water and energy, decent work, the right of representation, and equality can be found in this base. The critical point here is to interpret the social base as the ground of rights, instead of viewing it as a mere "charity list." A system which does not exclude anyone must be established.

Ecological ceiling, on the other hand, represents the limits of the planet. It means not exceeding the load that the natural systems can bear. Carbon emissions, biodiversity loss, freshwater utilization, change in land use are within these limits. Exceeding the limits of the planet not only creates environmental damage. It also leads to economic fragility. Climate shocks lead to fluctuation of food prices, drought harms agriculture, extreme heats increase the costs of cities, floods ruin infrastructure. It is for this reason that ecological ceiling is actually a matter of system security.

The area of a doughnut represents floating above the social base as well as not exceeding ecological ceiling. The most significant statement of Doughnut Economics is as follows: The aim of the economy is not merely growth; instead, it is to facilitate the possibility of a good life.

The first principle involves changing the objective. The objective is not to pursue growth, but instead to prioritize the well-being of both the people and the planet. The second principle emphasizes seeing the big picture. Economy is inherently linked to nature. It will collapse if nature is destroyed. The third principle focuses on the accurate definition of human beings. Human beings are not merely entities that seek their own interests. They engage in solidarity, follow rules, share resources. The fourth principle advises against perceiving the economy as a mechanical entity. Economy is a complex network. A change made in one place leads to an outcome in another place.

The fifth principle emphasizes the importance of designing for equality from the outset, instead of making corrections later. Factors such as tax system, access to education, wage policy, and care labor directly shape inequality. The sixth principle involves establishing circularity. The aim is to provide designs with long economic life, reuse and recovery rather than “buy, produce, consume, dispose” model. The seventh principle pertains to reducing reliance on growth. A system where the economy cannot sustain itself without continuous annual growth is considered fragile; Doughnut Economics aims to create a more robust framework.

You can check out  this study by Leeds University to learn more about principles of Doughnut Economics.

Doughnut Economics can be seen as a theory. However, some cities started to use it as a practical tool. One of the most famous examples of this is Amsterdam. Amsterdam employs the Doughnut to understand both local needs and global impacts of the city. This approach is referred to as “Amsterdam City Doughnut”. This framework also encompasses how the consumption patterns of the city impact nature and labor in different geographical areas. Amsterdam combines this approach with the objectives of circular economy. Concrete goals emerge prominently, including the reduction of material consumption in high-impact sectors like construction, enhancing reuse, and minimizing waste. This demonstrates that Doughnut Economics is not merely an abstract concept: it can be transformed into a language for planning.

The case of Copenhagen captures interest in a political context. Here, the Doughnut model was presented to the city council, approved through a vote, and a step was taken to make it a model for the city. And this shows that the Doughnut model is not merely a technical framework; it also represents a political decision regarding direction.

These city examples tell us the following: Doughnut Economics can be transformed into planning, measuring, and prioritizing when it is well-established.

Are Doughnut Economics and Circular Economics the Same?

These two concepts are frequently confused with each other, but they do not refer to the same thing. Circular economics aims to retain resources within the system for as long as possible. Waste is reduced through methods such as reusing, repairing, and recycling instead of producing, consuming, and disposing. One of the strongest references of this approach is Ellen MacArthur Foundation.

Please check out our blog post titled What is Circular Economy? for further details.

Doughnut Economics, on the other hand, provides a wider perspective. It emphasizes not only the allocation of resources into the cycle but also the importance of social justice. Because environmentally friendly solutions may be costly for some groups. Or the cost of transformation may not be distributed evenly. For this reason, the Doughnut approach poses the question, “sustainability for whom?” Circular economics can be used as a powerful tool within the Doughnut. Nevertheless, it does not represent the whole of the Doughnut.

Doughnut Economics is not aimed to be used only by the cities. It provides a clear mirror for companies as well. Companies influence both the social base and the ecological ceiling. A company can strengthen the social base by providing fair wages, inclusive employment, and safe working conditions. It can also force the ecological ceiling through high carbon emissions, water consumption, and waste production.

To whom does your business model benefit and what kind of cost does it have?
In the Doughnut model, this question turns into:
Is the value you create produced by contributing to the basic needs of humanity while not exceeding the limits of the planet?

Doughnut Economics provides a powerful framework. It is, however, difficult to implement. The main criticism is that the model is considered as overly idealistic. The reason is that it desires to achieve two targets at once. Increasing social welfare and not exceeding ecological limits. Achieving these two targets requires not only technical capacity, but also political consensus.

Another point of contention is the issue of measurement. The concepts of social base and ecological ceiling are clear. Nonetheless, variations occur universally regarding the selection of indicators, the methods of data collection, and the prioritization of targets. This is the reason the model necessitates a monitoring system that is tailored to the specific context. This framework is being discussed and updated with various indicators in the academia.

There is another question for the developing countries. “Wealthy nations have been expanding and exhausting natural resources for many years; now you advise us against growth?” This is a legitimate question. The justice claim of Doughnut Economics is tested exactly at this point because fair transformation does not involve telling everyone the same thing. It rather involves acknowledging the starting conditions of everyone and distributing the load accordingly.

Please check out our blog post for further details on just transition.

There is another argument asserting that Doughnut Economics is against growth. Nevertheless, Doughnut Economics does not oppose growth; it merely advocates for an economic model that does not prioritize growth. Some areas require growth, but some others require shrinkage. The Doughnut abandons growth as its objective, focusing instead on the well-being of humanity and the planet.

The most valuable aspect of Doughnut Economics is that it reminds us of the following fact: Economy exists for life itself. Not the other way around. This is the rationale behind the need to not only focus on economic growth but also to enhance fairness and resilience within the economy. Doughnut Economics has become a powerful conceptual tool because it combines social justice and the limits of the planet within the same framework. Many of the crises we experience today stem from the failure to manage these two areas concurrently. This is the reason why Doughnut Economics is not a trend, rather it is a way of “posing more correct questions concerning the future”. Because we recognize the necessity of considering both social justice and our planet as we shape the economies of the future.